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The Department of Justice filed a lawsuit Tuesday to prevent Penguin Random House's more than $2 billion acquisition of Simon & Schuster, alleging that the merger would violate antitrust law.
Why it matters: The DOJ said Penguin Random House, America's largest book publisher, would have "outsized influence" over which books are published in the U.S. and how much authors are paid if it's allowed to absorb Simon & Schuster.
- It's one of the Biden administration's first major antitrust challenges and comes after President Biden signed a sweeping executive order over the summer that limits corporate consolidation.
What they're saying: “The complaint filed today to ensure fair competition in the U.S. publishing industry is the latest demonstration of the Justice Department’s commitment to pursuing economic opportunity and fairness through antitrust enforcement,” Attorney General Merrick Garland said in a statement.
- “Books have shaped American public life throughout our nation’s history, and authors are the lifeblood of book publishing in America. But just five publishers control the U.S. publishing industry,” he added.
- “If the world’s largest book publisher is permitted to acquire one of its biggest rivals, it will have unprecedented control over this important industry."
The other side: "Blocking the transaction would harm the very authors DOJ purports to protect. We will fight this lawsuit vigorously and look forward to PRH serving as the steward for this storied publishing house in the years to come," Penguin Random House and Simon & Schuster said in a joint statement.
- "Simon & Schuster and Penguin Random House strongly disagree with the DOJ that this transaction will harm competition and believe firmly that there is no basis for these claims," Jonathan Karp, CEO of Simon & Schuster, said in a memo to employees.
The big picture: ViacomCBS said roughly a year ago that it would sell Simon & Schuster to Penguin Random House for $2.175 billion, though there were already indications that such a deal would attract antitrust scrutiny.
- The Justice Department said the deal would put Penguin Random House in control of close to half the U.S. market for acquiring publishing rights to anticipated top-selling books, leaving authors with fewer options and less leverage.
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Editor's note: This story has been updated to include comment from Penguin Random House and Simon & Schuster.