US Judge lays out case for blocking publishing giants merger

WASHINGTON (AP) — A federal judge has presented a case full of data as he blocks Simon & Schuster’s proposed purchase of Penguin Random House, giving the Biden Justice Department a victory in its dispute over two of the world’s largest publishers. collecting Fierce competition for best-selling books.

In her ruling filed Monday, U.S. District Court Judge Florence Payne also dismissed as irrelevant the publishers’ claim that Penguin Random House would be the best “home” for Simon & Schuster and other buyers — specifically As private equity firms – can destroy it. . That argument is irrelevant to the case and his decision, Penn wrote, which turns only on the issue of how mergers will affect competition.

Penn announced his ruling in a brief statement last week, keeping much of it under seal due to privacy concerns. The full ruling released this week includes data on publishing-market dynamics, replete with charts and graphs. Some company-related content has been redacted.

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“The government has presented a compelling case that foresees substantial competitive harm as a result of the proposed merger,” Pan wrote. “The post-merger concentration of the relevant market will be high: the merged entity will have a 49% market share, more than twice that of its nearest competitor.”

The merger “is likely to reduce competition in the market for publishing rights to anticipated top-selling books,” Pan wrote.

Penguin Random House, owned by the German conglomerate Bertelsmann, is the largest book publisher in the United States, as Penn stated in his ruling. He noted that Simon & Schuster, whose parent is New York-based media giant Paramount Global, is the third-largest U.S. publisher.

Penguin Random House last week called the decision “an unfortunate blow to readers and authors” and said it would seek an urgent appeal in federal court.

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

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

Penn’s rule was not surprising. Through much of a three-week non-jury federal trial in August, he signaled agreement with the Justice Department’s contention that Penguin Random House’s plan to buy Simon & Schuster for $2.2 billion could harm an important cultural industry. does

But it was still a dramatic departure from recent history in the book world and beyond. The publishing industry has been going strong for years with little government interference, even when Random House and Penguin merged in 2013 to create what was then the biggest publishing house in recent memory. The addition of Penguin Random House and Simon & Schuster would have created a company far superior to any rival.

The “Big Five” companies — the others being Hachette, Macmillan and HarperCollins — publish 91% of expected best-selling books, Penn noted in his ruling.

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In his 80-page opinion piece, Penn draws on literary history, pointing to John Steinbeck — the “Grapes of Wrath” author whose publisher was Viking Press, now owned by Penguin Random House.

“John Steinbeck famously said, ‘I guess there are never enough books,'” Paine wrote. “He apparently meant it figuratively, as a comment on the power of books to educate, enrich, and enlighten.” But today, his statement is also true in an economic sense: the retail market of books in the United States was more than 11.5 billion dollars in 2019 and only continues to increase.

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

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