US judge blocks Penguin Random House and Simon & Schuster’s £1.9bn merger
A US judge has blocked Penguin Random House’s planned $2.18bn (£1.89bn) purchase of Simon & Schuster, after finding the move would hurt competition for anticipated best sellers.
Judge Florence Pan of the US district court for the District of Columbia said that the combination of Bertelsmann owned Penguin and Paramount Global owned Simon & Schuster would “substantially” lessen competition.
The largest five publishers currently control 90 per cent of the market, with a merged Penguin Random House and Simon & Schuster making up around 49 per cent of the blockbuster book space.
The crux of the case was focused on authors’ earnings as opposed to consumer choice, and the argument from the US government was that advances for writers across the board would be lower if the publishing giants came together, as there would be less competition to grab the best books that would drive up prices.
The justice department said the merger would “exert outsized influence over which books are published in the United States and how much authors are paid for their work”.
Some writers also felt that the merger could have a dangerous effect on the market.
“You might as well say you’re going to have a husband and wife bidding against each other for the same house. It’s kind of ridiculous. Consolidation is bad for competition,” Stephen King, author of It and The Shining, said whilst giving evidence during the three-week trial this summer.
King tweeted in the early hours of this morning that he was “delighted” by the news that the merger had been blocked.
However, the argument from the publisher’s lawyers was that coming together under one company would drive savings and actually allow for more time to be spent on more books and talent,
Penguin Random House, which is the world’s largest publisher. said in statement that it would immediately request an expedited appeal, stating that it was “an unfortunate setback for readers and authors” because the merger would be “pro-competitive” for the market.
“As we demonstrated throughout the trial, the Department of Justice’s focus on advances to the world’s best-paid authors instead of consumers or the intense competitiveness in the publishing sector runs contrary to its mission to ensure fair competition,” the publisher of the likes of Michelle Obama and Richard Osman said.