The Justice Department is suing to block a $ 2.2 billion book publishing deal that would have reshaped the industry, saying the consolidation would hurt authors and, ultimately, readers.
German media giant Bertelsmann’s Penguin Random House, already America’s largest publisher, wants to buy New York-based Simon & Schuster, whose authors include Stephen King, Hillary Clinton and John Irving, from television and film company ViacomCBS .
The Justice Department filed an antitrust complaint in federal court in Washington, DC on Tuesday in connection with the Biden administration’s first major antitrust action. The department said the deal would give Penguin Random House “disproportionate influence” over books published in the United States and the amount of authors’ remuneration.
âIf the world’s largest book publisher is allowed to acquire one of its biggest rivals, it will have unprecedented control over this important industry,â Attorney General Merrick Garland said. âAmerican authors and consumers will pay the price for this anti-competitive merger – less progress for authors and ultimately less books and less variety for consumers. “
The Simon & Schuster purchase would reduce to four the so-called Big Five, which dominate US publishing and include HarperCollins, Hachette Book Group and Macmillan.
Because it targets the prices paid to authors as well as those paid by consumers, the lawsuit shows a possible new direction for antitrust regulators under the Biden administration, suggested Daniel Crane, a professor of law at the University of Michigan who focuses on anti-rust.
“There is a desire to think very comprehensively about all the interests that could be harmed,” he said. âThis raises a lot of interesting questions about publishing and about competition in publishing. “
The government’s case is for a conventional market of five gigantic old-fashioned publishing houses. The eclipsing one is Amazon, which created an empire and an e-book ecosystem from 1995, controlling not only the bookstore, but also the dominant devices for reading e-books and listening to audiobooks, and possibly some of the content. . E-books are lower than the prices of conventional books, providing ammunition for publishing houses by claiming that they have to inflate to survive the competition.
The deal has raised concern among rival writers and publishers. The Authors ‘Guild said it was against the acquisition because there would be less competition for the authors’ manuscripts.
News Corp of Rupert Murdoch, which owns HarperCollins and has also reportedly been interested in buying Simon & Schuster, also criticized the deal. Its CEO, Robert Thomson, said last fall that Bertelsmann was “buying market dominance as a book giant”.
In a statement, Penguin Random House and Simon & Schuster said they would fight the lawsuit. They say blocking the deal would hurt the authors.
“The DOJ lawsuit is wrong on facts, law and public policy,” said Daniel Petrocelli, attorney for Penguin Random House. “It is important to note that the DOJ has not found, or alleged, that the combination will reduce competition in the sale of books.”
The new antitrust lawsuit indicates that the Department of Justice “is prepared to use all of its authority to fight the wave of consolidation that is engulfing the American economy,” said Sarah Miller, executive director of the American Economic Liberties Project, a organization which campaigns for government action against commercial concentration.
“This case also reflects how Amazon’s dominance is shaping up as a predatory presence for most businesses in the economy,” Miller said in a statement. “The CEOs of the number one and number three publishers have openly sought to use this merger to become an ‘exceptional partner’ for Amazon.”
AP National Writer Hillel Italy and Business Writer Marcy Gordon contributed to this report.