Judge Florence Pan of the U.S. District Court for the District of Columbia said in a brief order Monday that she found the Justice Department had shown the deal would “substantially harm” competition “in the market for U.S. publishing rights to anticipated books with top sellers”. Unlike most merger battles, which focus on what consumers pay, this one focused on creators’ profits. The US government argued that fewer publishing houses competing with each other would lead to lower advances for authors across the board, but it focused on a small part of the market: bestselling authors who were paid $250,000 or more. The government identified best-selling titles that were the subject of bidding wars between PRH and Simon & Schuster and argued that the competition had inflated the author’s fee. The five largest publishers control 90% of the market. A combined PRH and Simon & Schuster would control 49% of the blockbuster book market, while its closest competitors would be less than half its size. PRH and Simon & Schuster executives argued that bidding wars between the two companies were rare and argued that the merger would actually benefit authors’ pay because it would lead to savings and allow them to spend more on books. PRH authors include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steele, while Simon & Schuster publishes Stephen King, Jennifer Weiner and Hillary Clinton, among others. The news is a major victory for the Biden administration, which has sought to strengthen antitrust enforcement. The Justice Department argued that the merger would “have a major influence on which books are published in the United States and how much authors are paid for their work.” Penguin Random House attorney Daniel Petrocelli, who defeated the government in an earlier merger challenge, argued during the trial that the deal would have “tremendous benefits” for both readers and authors, as the imprints or brands owned by the two giants will continue to compete with each other. King, author of several bestsellers including It, The Stand and The Shining, was among several best-selling authors and agents who testified during the three-week trial. He disputed arguments that the merger would bring “enormous benefits”. “You might as well say you’re going to have a husband and wife bidding against each other on the same house. It’s kind of ridiculous,” King told the court. “Consolidation is bad for competition.” On Monday, King told The New York Times that he was “pleased with the outcome.” “Further consolidation would have done slow but steady damage to authors, readers, independent booksellers and small publishing companies,” he said. “Publishing should focus more on cultural development and literary achievement and less on corporate balance sheets.” Penguin is owned by German media group Bertelsmann while Paramount Global owns Simon & Schuster. In a statement, Penguin Random House called the decision “an unfortunate setback for readers and authors” and argued that the Justice Department’s “focus on advances to the world’s highest-paid authors rather than consumers or the fierce competition in publishing domain is opposite. in its mission to ensure fair competition”. Reuters contributed to this story
