WASHINGTON– The government and publishing titan Penguin Random House are set to trade opening salvos in a federal antitrust lawsuit on Monday as the United States seeks to stop America’s biggest book publisher from absorbing its simon rival & Schuster. The case is a key test of the Biden administration’s antitrust policy.
The Justice Department has filed a lawsuit to block the $2.2 billion merger, which would reduce the Big Five U.S. publishers to four.
In an unusual move, the government’s star witness will be Stephen King, the renowned and transcendental author whose works are published by Simon & Schuster. King is expected to testify during the week-long trial in US District Court in Washington, D.C.
The government says it would hurt authors and ultimately readers if German media titan Bertelsmann, of which Penguin Random House is a division, were allowed to buy Simon & Schuster of the American media and entertainment company Paramount Global. He says the deal would thwart competition and give Penguin Random House gigantic influence over books published in the United States, likely reducing authors’ salaries and giving consumers fewer books to choose from.
The publishers counter that the merger would increase competition between publishers to find and sell the hottest books, by allowing the merged company to offer larger upfront payments and marketing support to authors. This would benefit readers, booksellers and authors, they say.
Opposing attorneys for both sides will present their cases to U.S. District Judge Florence Pan.
Both New York-based publishers have impressive stables of best-selling authors, who have sold millions of copies and landed multimillion-dollar deals. Within the Penguin Random House constellation are Barack and Michelle Obama, whose memoir package totaled approximately $65 million, Bill Clinton, who received $15 million for his memoir, Toni Morrison, John Grisham and Dan Brown.
Simon & Schuster counts Hillary Clinton, who received $8 million for her memoirs, Bob Woodward and Walter Isaacson. And King.
Bruce Springsteen splits the difference: his “Renegades: Born in the USA,” starring Barack Obama, was published by Penguin Random House; his memoirs, by Simon & Schuster.
The Department of Justice argues that, as things stand, No. 1 Penguin Random House and No. 4 Simon & Schuster, in terms of total sales, compete fiercely for the publishing rights to top-selling books. If allowed to merge, the merged company would control nearly 50% of the market for such books, according to the report, harming competition by reducing advances paid to authors and diminishing output, creativity and diversity.
The Big Five – the other three are Hachette, HarperCollins and Macmillan – dominate American publishing. They account for 90% of the best-selling book market, according to the government.
The Biden administration is breaking new ground in corporate concentration and competition, and the government’s complaint against the publisher merger can be seen as a milestone.
President Joe Biden has made competition a mainstay of his economic policy, denouncing what he calls the excessive market power of a range of industries and stressing the importance of vigorous competition for the economy, workers, consumers and small businesses. Biden, a Democrat, called on federal regulators, including the Justice Department and the Federal Trade Commission, to pay greater attention to big business consolidations.