A federal judge on Monday began a trial to determine whether Penguin Random House should be allowed to buy Simon & Schuster, Inc. The lawsuit could have major implications for the book publishing industry. will test the Biden administration’s efforts to expand antitrust enforcement.
Justice Department Attorney John Reid said in his opening statement in US District Court for the District of Columbia that the merger “must stop.”
Reed said the government claims the merger would reduce the number of bidders for the publishing rights of what the government calls “the best-selling book,” thereby reducing the value of advance payments made to authors. explained. “This lawsuit is intended to protect those authors and books,” he said.
Simon & Schuster’s $2.18 billion acquisition expands Penguin Random House, already America’s largest book publisher, and eliminates one of the other “Big 5” bookstores. The industry has already experienced a fair amount of consolidation, with Penguin Random House owned by German firm Bertelsmann being the result of a 2013 merger.
The lawsuit is also an early attempt by the Biden administration to take on a boundary-pushing antitrust lawsuit, in which it argues that corporate concentration is bad for workers, including the book’s authors.
The companies say they believe Simon & Schuster’s authors will benefit from Penguin Random House’s significant distribution resources and will be able to increase author compensation through more efficient business operations. Penguin Random House attorney Daniel Petrocelli argued in his opening statement that the government’s case was fundamentally flawed. He said the idea that there are separate categories of books in the industry that are expected to be bestsellers is not based on reality. Petrocelli added that publishers often pay large advances for poorly performing books.
“All books are dreams,” said Petrocelli. “Sometimes dreams come true, sometimes they don’t.”
The trial is expected to bring a parade of publishing executives, copyright agents and authors as witnesses to Judge Florence Y. Pan’s wood-paneled courtroom.
On Monday, Michael Peaches, chief executive of Hachette Book Group, another Big 5 publisher, said he believed the merger would “de-diversify” books and reduce authors’ upfront payments. I testified. Pietsch said he hopes Hachette’s parent company will pursue his acquisition of Simon & Schuster if the proposed merger falls apart.
Stephen King, best-selling author of horror novels, is expected to testify for the government.
