Penguin Random House Faces Off Against Federal Antitrust Suit

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Publishing giant Penguin Random House is now defending itself against federal monopoly claims. The massive publisher wants to absorb rival company Simon & Shuster, but the federal government says this will give Penguin far too much power in the physical publishing world.

The case, which started on August 1, will serve as an early test for the Biden administration’s new antitrust policies. The Justice Department stepped in and blocked the merger, which was set to take place to the tune of $2.2 billion.

There are currently five major book publishers in the US, and Penguin Random House’s acquisition of Simon & Shuster would have shrunk that number to 4. Federal lawyers say this would be unacceptable, and that there needs to be more competition in the physical book publishing industry.

The Two Sides Meet in Court

Lawyers for the federal government and Penguin Random House both appeared in court Monday and laid out their arguments. The government says that Penguin can’t absorb Simon & Shuster because it would reduce competition and stifle the necessary public discourse caused by thought-provoking books.

Federal lawyers argue the written word holds a unique place in the public forum of ideas, and that competition in the publishing industry is necessary to keep ideas flowing freely.

Penguin counters that it will be able to publish books more efficiently if it absorbs Simon & Shuster. As such, it argues that the merger is necessary to continue the expansion of ideas and to enlighten the public with more thought-provoking books.

The federal government’s main witness, Stephen King, is slated to appear on the stand later in the trial.

Stephen King Will Appear During Trial

Famous author Stephen King is well known for his horror novels, like It, Salem’s Lot, and The Stand. Simon & Shuster publishes King’s works, and he is expected to testify on behalf of the government to implore the court to not allow the merger to go through.

The federal government’s argument highlights that Penguin is owned by Bertelsmann, a German conglomerate, while Simon & Shuster is owned by Paramount Global.

As such, prosecutors argue that American readers would have fewer choices and that authors would be paid less – and selected for publication less often–if Bertelsmann exercised a large degree of control over the US publishing industry.

The defense counters that, with more resources at their disposal, authors could be paid more, which would drum up more competition in the industry. 

The case will be an important test of the Biden Administration’s new hardline stance against multimedia conglomerates snapping up competitors in the US. If the federal government is successful, it could set a new tone for how companies can expand in the future.