Judge blocks $2.2B merger of Penguin Random House and Simon & Schuster
A federal judge blocked on Monday Penguin Random House's move to acquire rival publisher Simon & Schuster in a win for the Biden administration, which has sought to push the envelope of antitrust enforcement.
Why it matters: The ruling, which comes after a three-weeklong trial, would significantly impact the publishing industry, though Penguin Random House plans to appeal.
- The case is seen as a precedent-setter for mergers and acquisitions at large under the Biden administration.
- Penguin Random House is the largest book publisher in the U.S., while Simon & Schuster is the fourth largest.
Driving the news: District Court Judge Florence Y. Pan wrote in her order that the Department of Justice has successfully shown that the proposed $2.2 billion merger could "substantially ... lessen competition in the market."
Catch up quick: Experts from the two publishers had argued during the trial that the merger would save costs and allow the company to allocate more money to buy books, per the New York Times.
- The Department of Justice, along with author Stephen King and executives from other major publishing houses, countered that it would result in lower advances for authors, harm writers who are just starting out and decrease the range of books published.
What they're saying: "Today's decision protects vital competition for books and is a victory for authors, readers, and the free exchange of ideas," said Assistant Attorney General Jonathan Kanter of the DOJ's Antitrust Division in a statement.
- "The decision is also a victory for workers more broadly," Kanter added. "It reaffirms that the antitrust laws protect competition for the acquisition of goods and services from workers."
The other side: "We strongly disagree with today's decision, which is an unfortunate setback for readers and authors, and we will immediately request an expedited appeal," a spokesperson for Penguin Random House said in a statement.
- "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.
- "We believe this merger will be pro-competitive, and we will continue to work closely with Paramount and Simon & Schuster on next steps."
- Paramount and Simon & Schuster in separate statements expressed their disappointment at the ruling and confirmed that the parties were looking at options including seeking "an expedited appeal"
Editor's note: This article has been updated with comment from the Justice Department, Paramount and Simon & Schuster.