Judge blocks Penguin Random House from buying Simon & Schuster over antitrust concerns

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NEW YORK — A federal judge has blocked Simon & Schuster’s proposed purchase of Penguin Random House, agreeing with the Justice Department that joining the world’s two largest publishers would “lower competition” for “best-selling books”. ” Might be possible. The ruling was a victory for the Biden administration’s tough approach to the proposed merger, a break from the precedent of decades under Democratic and Republican leadership.

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US District Court Judge Florence Y. PAN announced the decision in a brief statement on Monday, saying that most of its decisions remain under seal at this time because of “confidential information” and “highly confidential information.” He asked both the sides to meet on Friday and suggest improvements.

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Penguin Random House quickly condemned the decision, which it called “an unfortunate blow to readers and writers”. In its statement on Monday, the publisher said it would seek an early appeal.

Jonathan Cantor, assistant attorney general for the Justice Department’s Antitrust Division, praised the decision, saying in a statement that the decision “protects significant competition for books and is a victory for authors, readers, and the free exchange of ideas.”

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He added: “The proposed merger would reduce competition, reduce author compensation, reduce the breadth, depth and diversity of our stories and ideas, and ultimately undermine our democracy.”

Pan’s discovery wasn’t surprising—through most of the 3-week trial in August he had agreed with the Justice Department’s argument that Penguin Random House’s plan to buy Simon & Schuster for $2.2 billion, an important cultural could harm the industry.

But it was still a dramatic departure from recent history in the book world and beyond. The publishing industry has been consolidating over the years with little government intervention, even when Random House and Penguin merged in 2013 to become the largest publishing house in memory at the time. The joining of Penguin Random House and Simon & Schuster would have made the company far more than any rival, and those opposing the merger included one of Simon & Schuster’s signature writers, Stephen King, who served on behalf of the government last summer. Testified.

Biden The Justice Department is moving forward with aggressive enforcement of federal antitrust laws, which officials say are intended to ensure a fair and competitive market.

Monday’s news follows recent losses for the department in two important antitrust cases in separate federal courts. The DOJ lost its bid to prevent US Sugar, a major US sugar producer, from acquiring rival Imperial Sugar Company, one of the largest sugar refiners in the country. Prosecutors indicated that they intended to appeal the decision. They were also stymied in their attempt to block a nearly $8 billion takeover by UnitedHealth gro UNH,
+0.71%
p, which runs the largest US health insurer, Change Healthcare, a healthcare technology company.

The DOJ is also battling American Airlines and JetBlue in an antitrust trial in federal court in Boston, challenging their regional partnership in the Northeast, which the government calls a de facto merger.

The Justice Department’s case against Penguin Random House was not focused on overall market share or a potential price increase for the customer. The DOJ argued instead that the new company would dominate the market for commercial books with author advances of $250,000 and above, that the size of advances would be reduced and the number of releases would be reduced.

For Penguin Random House and the New York-based publishing world, August proved an often uncomfortable broadcast of tested business practices, internal disagreements and missed opportunities. The executives at the stand spoke of the bestselling works they failed to achieve and admitted that most books don’t make money. Emails and private text messages revealed tensions between top executives at Penguin Random House.

“I apologize for the sentimental language,” Markus Dohle, global CEO of Penguin Random House, testified after a few text messages appeared.

Dohle promised that the imprints of Penguin Random House and Simon & Schuster would still be allowed to bid against each other for the books. But he admitted under oath during the trial that his guarantee was not legally binding. Pan otherwise consistently challenged Penguin Random House’s assurances that the merger would not reduce competition.

Simon & Schuster is likely to end up under new ownership, regardless of the outcome of any legal appeals. The publisher was up for sale well before the Penguin Random House deal was announced in late 2020 and the publisher’s corporate parent, Paramount Global PARA,
-3.68%,
has said that it does not see Simon & Schuster as part of its future. Rupert Murdoch’s News Corp NWS was among the bidders against Penguin Random House.
-0.06%,
Which is the owner of HarperCollins Publishers.

Per the terms of the proposed sale, Penguin Random House would have to pay Paramount approximately $200 million through the merger.

Simon & Schuster is one of the nation’s oldest and most successful publishers, with authors ranging from King and former Secretary of State Hillary Clinton to Colleen Hoover and Doris Kearns Goodwin. Penguin Random House writers include Clinton’s husband, former President Bill Clinton, “Where the Crowds Sing” novelist Delia Owens, and historian Robert A. Caro.

In a company memo shared Monday with the Associated Press, Simon & Schuster CEO Jonathan Karp sought to reassure employees that “despite this news, our company continues to grow. On behalf of many of our brilliant writers.” Thanks to all of your efforts, we are more successful and valuable than ever.”

Meanwhile, Pan has since been appointed to the U.S. Court of Appeals for the DC Circuit, replacing Ketanji Brown Jackson after Biden was nominated and approved by the Senate for the Supreme Court.

Credit: www.marketwatch.com /

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