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The Justice Department is suing blocking a $ 2.2 billion book publishing deal that changed the industry, saying consolidation will hurt authors and ultimately readers.
Penguin Random House of the German media giant Bertelsmann, already the largest American publisher, wants to buy the New York-based Simon & Schuster, whose authors include Stephen King, Hillary Clinton and John Irving, from the television and film company ViacomCBS.
The Justice Department filed an antitrust lawsuit in federal court in Washington, DC on Tuesday as part of the Biden administration’s first major antitrust lawsuit. The department said the deal would give Penguin Random House an “oversized influence” over what books are published in the US and how much authors are paid.
“If the world’s largest book publisher is allowed to acquire one of its biggest competitors, it will have unprecedented control over this important industry,” said Attorney General Merrick Garland. “American authors and consumers will pay the price of this anti-competitive merger – lower advances” for authors and ultimately less books and less diversity for consumers. “
The purchase of Simon & Schuster would reduce the so-called Big Five, which dominate American publishing and which include HarperCollins, Hachette Book Group and Macmillan, to four.
With the lawsuit being paid on both author and consumer prices, the lawsuit shows a possible new direction for antitrust authorities under the Biden administration, suggested Daniel Crane, a law professor at the University of Michigan specializing in antitrust law .
“There is a desire to think very deeply about any interests that could be harmed,” he said. “It raises a lot of interesting questions about publishing and publishing competition.”
The government’s case deals with a conventional market of five huge old publishers. In the shadows stands Amazon, which since 1995 has created an empire and an ecosystem of digital books that not only controls the bookstore but also the predominant devices for reading e-books and audiobooks, and ultimately some of the content. The e-books undercut the prices of conventional books and provide publishers with ammunition for claims that they have to pile up to compete.
The deal sparked concern among writers and competing publishers. The Authors Guild has spoken out against the takeover because there would be less competition for the authors’ manuscripts.
Rupert Murdoch’s News Corp, which owns HarperCollins and was also allegedly interested in buying Simon & Schuster, also hit the deal. Its CEO Robert Thomson said last fall that Bertelsmann was buying “market dominance as a book giant”.
In a statement, Penguin Random House and Simon & Simon & Schuster said they would fight the lawsuit. They say blocking the deal would hurt the writers.
“The DOJ’s lawsuit is false about the facts, law and public order,” said Daniel Petrocelli, attorney for Penguin Random House. “What is important is that the DOJ has neither determined nor alleged that the merger will reduce competition in the sale of books.”
The new antitrust lawsuit signals that the Justice Department “stands ready to use its full authority to combat the wave of consolidation that is engulfing the American economy,” said Sarah Miller, executive director of the American Economic Liberties Project, an organization advocating action by the Government against US economy uses business concentration.
“This case also reflects how Amazon’s dominance is emerging as a predatory presence for most businesses in the economy,” Miller said in a statement. “The CEOs of publishers number one and number three have openly tried to take advantage of this merger to become an ‘exceptional partner’ for Amazon.”
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AP National Writer Hillel Italie and Business Writer Marcy Gordon contributed to this report.
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