In preventing a book merger, a US judge cites the impact on best-selling authors

on Nov 08, 2022

According to a written opinion released Monday, a U.S. judge cited negative effects on top-selling authors in blocking a planned $2.2 billion merger of Penguin Random House, the world's largest book publisher, and rival Simon & Schuster.

In a brief order issued Oct. 31, Judge Florence Pan of the United States District Court for the District of Columbia stated that the Justice Department had demonstrated that the deal would significantly reduce competition "in the market for the U.S. publishing rights to anticipated top-selling books."

Penguin is owned by the German media conglomerate Bertelsmann SE & Co, while Simon & Schuster is owned by Paramount Global.

Pan stated that the merged entity would control 49% of the publishing rights market for anticipated best-sellers, and that the government had provided "strong evidence of likely unilateral and coordinated effects that would harm competition."

Those best-selling authors, according to Pan, "have fewer outlets that can satisfy their requirements, and thus are vulnerable to anticompetitive behaviour."

Penguin authors include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steele, while Simon & Schuster publishes Stephen King, Jennifer Weiner, and Hillary Rodham Clinton, among others.

The government argued against the agreement, claiming that it would result in less competition for blockbuster books and lower advances for authors earning $250,000 or more.

During the 12-day trial, Penguin Random House lawyer Daniel Petrocelli argued that the deal would have "enormous benefits" for readers and authors because the two companies' imprints, or brands, would still compete.

This pledge was criticised by best-selling author Stephen King, who testified during the three-week trial: "You might as well say that a husband and wife will be bidding against each other for the same house. It's a little ridiculous."

Penguin Random House, HarperCollins, Macmillan, Simon & Schuster, and Hachette are the top five publishers, with Walt Disney Co and Amazon.com Inc also present. News Corporation owns HarperCollins.

Pan's viewpoint emphasised the importance of the industry, quoting John Steinbeck, who said, "I guess there are never enough books."

"People want to read," Pan wrote. "And book publishers wield enormous power and responsibility in deciding which books - and thus which ideas and stories - will be widely available to the public."