U.S. judge pleads for blocking publishing giants merger

WASHINGTON– A federal judge exposed a data-laden case explaining why she blocked plans to buy Simon from Penguin Random House & Schuster, giving Biden’s Justice Department a victory in its claim that combining two of the world’s biggest publishers would hurt competition for top-selling books.

In her decision filed Monday, U.S. District Court Judge Florence Pan also ruled the publishers’ claim that Penguin Random House would be the best “home” for Simon to be irrelevant. & Schuster and that other buyers – including private equity firms – could destroy it. This argument is irrelevant to the case and its decision, Pan wrote, which only addresses the question of how the merger would affect competition.

Pan announced his decision in a brief statement last week, keeping most of it under seal due to privacy concerns. The full ruling released this week looks at publishing market dynamics data, replete with charts and graphs. Some company-related documents are redacted.

“The government has presented a compelling case that predicts substantial harm to competition as a result of the proposed merger,” Pan wrote. “Concentration of the relevant market after the merger would be worrying: the merged entity would have a market share of 49%, more than double that of its nearest competitor.”

The merger “will likely significantly reduce competition in the market for publishing rights to best-selling books,” Pan wrote.

Penguin Random House, owned by German conglomerate Bertelsmann, is the largest book publisher in the United States, as Pan explained in his ruling. She noted that Simon & Schuster, whose parent company is New York-based media giant Paramount Global, is the third-largest US publisher.

Last week, Penguin Random House called the decision “an unfortunate setback for readers and authors” and said it would seek an expedited appeal in federal court.

Pan’s decision was a victory for the Biden administration’s tougher approach to proposed mergers, a break from decades of precedent under Democratic and Republican leadership.

The Justice Department declined to comment further on Pan’s decision on Tuesday. Simon & Schuster and Paramount declined to comment.

Pan’s decision was not surprising. During much of the three-week federal non-jury trial in August, she indicated her agreement with the Justice Department’s assertion that Penguin Random House’s plan to buy Simon & Schuster for $2.2 billion could harm a vital cultural industry.

But it was still a dramatic departure from recent history in the world of books and beyond. The publishing industry has been consolidating for years with little government interference, even when Random House and Penguin merged in 2013 and formed what was then the largest memoir publishing house. The union of Penguin Random House and Simon & Schuster would have created a company far surpassing any rival.

The “Big Five” companies — the others are Hachette, Macmillan and HarperCollins — publish 91% of top-selling books, Pan noted in his ruling.

In his 80-page opinion, Pan touched on literary history, opening with a nod to John Steinbeck – the author of “Grapes of Wrath” whose publisher was Viking Press, now owned by Penguin Random House.

“John Steinbeck said, ‘I guess there are never enough books,'” Pan wrote. “He apparently meant this figuratively, as a comment on the power of books to educate, enrich and explore. But today, his statement also rings true in an economic sense: The retail market for books in the United States exceeded $11.5 billion in 2019 and has continued to grow.

“People want to read. And book publishers have the enormous power and responsibility to decide which books – and therefore which ideas and stories – will be made widely available to the public,” she added.

About Florence M. Sorensen

Check Also

Russian Hackers Release Stolen Abortion Records on Dark Web

People’s stolen data is published on the dark web under a “good list” and a …