Imagination Unbound

Judge Blocks a Merger of Penguin Random House and Simon & Schuster

www.nytimes.com

A federal judge blocked on Monday a bid by Penguin Random House, the biggest book publisher in the United States, to buy one of its main rivals, Simon & Schuster, in a significant victory for the Biden administration, which is trying to expand the boundaries of antitrust enforcement.

The judge, Florence Y. Pan, who heard the case in the United States District Court for the District of Columbia, said in an order that the Justice Department had demonstrated that the merger might “substantially” harm competition in the market for U.S. publishing rights to anticipated top-selling books.

The full order laying out Judge Pan’s reasoning is temporarily under seal because it contains confidential information, and will be released later after both parties file redactions.

Penguin Random House and its parent company, Bertelsmann, said in response on Monday that they planned to appeal.

In a statement, Penguin Random House called the decision “an unfortunate setback for readers and authors” and argued that “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.”

The victory is a notable one for the Justice Department. Judges have ruled against several of its previous challenges to corporate deals, including UnitedHealth Group’s purchase of a technology company. In a statement on Monday, the Justice Department hailed the ruling as a win for authors and readers.

“The proposed merger would have reduced competition, decreased author compensation, diminished the breadth, depth, and diversity of our stories and ideas, and ultimately impoverished our democracy,” said Assistant Attorney General Jonathan Kanter of the department’s antitrust division.

The government had a high-profile witness on its side with the author Stephen King, who testified that the merger would be especially harmful to writers who are just starting out, and took a contrary position to his own publisher, Scribner, which is part of Simon & Schuster. On Monday night, Mr. King said in an email interview that he was “delighted with the outcome.”

“Further consolidation would have caused slow but steady damage to writers, readers, independent booksellers, and small publishing companies,” he said. “Publishing should be more focused on cultural growth and literary achievement and less on corporate balance sheets.”

Executives from other major publishing houses, among them the heads of Hachette and HarperCollins, also testified against the deal.

In seeking to block the merger, the government argued that the deal would leave authors with fewer options for getting their work published, lead to lower advances for writers and even cause a reduction in the number and diversity of titles published.

“One entity’s control of almost half of the nation’s anticipated top-selling books threatens competition in multiple ways,” the Justice Department wrote in a post-trial brief. “Authors’ advances would fall — advances that they use to pay their bills and that reflect compensation for their work.”