Penguin-S&S merger hits roadblock with DOJ lawsuit

The Justice Division on Tuesday filed a lawsuit towards writer Penguin Random Home that seeks to dam its proposed merger with rival Simon & Schuster. It’s one of many Biden administration’s first large antitrust challenges, and it alleges Penguin’s acquisition would give it an excessive amount of management over what books are printed in America and the way a lot authors receives a commission.

Antitrust activists have been buoyed by the brand new administration’s extra aggressive swing at company consolidation, however they could be stunned to see it so involved a few merger in e-book publishing. However, the business is undeniably dominated by a choose few—Penguin and Simon & Schuster, plus NewsCorp’s HarperCollins, Hachette, and Macmillan—and it has entered a interval of accelerating focus. Hachette just bought Workman Publishing (of What to Count on When You’re Anticipating and 1,000 Locations to See Earlier than You Die fame), and Lord of the Rings writer Houghton Mifflin Harcourt became part of HarperCollins again in Could.

But even after these mergers, these publishers have been no match for Penguin. It controls 300 imprints globally, and accounts for 21% of all U.S. books gross sales every year. In the meantime, Simon & Schuster is America’s third-largest writer, cranking out about 2,000 titles a yr underneath three dozen imprints, or about 6% of the U.S.’s complete annual e-book gross sales.

The DOJ wasn’t cool with that quantity of firepower being underneath one roof: “If the world’s largest e-book writer is permitted to accumulate one in every of its greatest rivals, it’ll have unprecedented management over this vital business,” Legal professional Normal Merrick Garland said in a statement. “American authors and shoppers pays the worth of this anticompetitive merger—decrease advances for authors and finally fewer books and fewer selection for shoppers.” Moderately than focus solely on the attainable hurt to shoppers, the DOJ is making the case that their merger would damage authors via what’s referred to as a monopsony—one thing that exists when one firm turns into the dominant purchaser of a service or good, versus the dominant producer like in a monopoly.

Some tech analysts are a bit baffled by the transfer and, subsequently, the DOJ’s priorities—although the Biden administration’s reply could also be that, in its thoughts anyway, that is a neater combat than taking up Huge Tech.

Penguin is vowing to “combat vigorously” towards the federal government’s problem. In accordance with the New York Times, Daniel Petrocelli has been employed to signify the corporate in court docket. He’s the lawyer who defeated the DOJ when it tried to thwart AT&T and Time Warner’s $100 billion merger in 2017, and likewise received the wrongful-death lawsuit towards O.J. Simpson again within the ’90s.