Federal judge Penguin Random House banned from merging with rival Simon & Schuster blocked

• A federal judge bans publishing giant Penguin Random House from acquiring its rival Simon & Schuster.
• The transaction, valued at $2.2 billion, would have united two of the five major U.S. publishers.
• The Justice Department applauded the judgment, which comes only one week prior.

A federal judge banned publishing giant Penguin Random House from acquiring its rival Simon & Schuster on Monday, siding with the US Department of Justice, which had opposed the mega-merger.

The transaction, valued at $2.2 billion, was announced in November 2020 and would have united two of the five major American publishers.

In her judgment, US District Court Judge Florence Pan stated that the government had demonstrated convincingly that the merger would “significantly” reduce competition “in the market for the US publishing rights to anticipated top-selling books.”

Pan stated that her complete justification for the decision would be released under seal because it depended on secret business information.

The Justice Department applauded the judgment, which comes only one week prior to important midterm elections in which Democratic President Joe Biden has attempted to portray his party as a champion of consumer rights.

Biden’s Justice Department has been more aggressive than that of his predecessors in its efforts to halt mergers, with mixed results thus far.

Assistant Attorney General Jonathan Kanter said in a statement, “Today’s decision protects vital competition for books and is a victory for authors, readers, and the free exchange of ideas.”

Penguin Random House, a subsidiary of the German Bertelsmann Group, is the industry leader in the United States, employing 10,000 people globally and publishing almost 15,000 books annually.

Simon & Schuster, which is owned by Paramount, is the fourth largest of the “Big Five” American publishing houses, which also include HarperCollins, Hachette Book Group USA, and Macmillan Publishers.

Stephen King and Doris Kearns Goodwin are prominent authors published by Simon & Schuster, whereas Barack and Michelle Obama and John Grisham have novels published by Penguin Random House.

It is also preparing to publish Prince Harry’s autobiography at the beginning of 2023.

Neither firm quickly responded to AFP’s requests for comment.

Prior to the U.S. lawsuit against the acquisition, the United Kingdom’s competition regulator had also examined the merger closely, given both groups have British divisions. In May 2021, it issued a favorable opinion.

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