The U.S. Department of Justice prevented Penguin Random House from taking up Simon and Schuster

Penguin Random House, founded in 2013 by a combination of Bertelsmann's Bertelsmann Group and Penguin Publishing Group of Pearson Group in the United Kingdom, is one of the world's largest publishing companies, with its publishing business accounting for more than 25% of the global market. Simon & Schuster is one of the six largest publishers in the United States, founded in New York in 1924.

In November 2020, Bertelsmann, owner of Penguin Random Books, won the competition against rival Rupert Murdoch's News Corp to buy Simon and Schuster from Viacom CBS for $2.175 billion. The acquisition became one of the most talked-about events in the publishing industry of the year. Many industry insiders criticized the transaction for weakening market competition and forming a monopoly situation.

Criticism from the author community is also in the news, and the acquisition will reduce the number of large publishers in the United States, thus affecting the ability of writers to negotiate with publishers. The American Writers Guild expressed a collective protest against the acquisition in 2020. In 2021, the UK competition regulator also said that it had stepped in to investigate the deal, arguing that after the merger, the new publishing giant will occupy more than 35% of the US book market, which will have a considerable adverse impact not only on authors but also on consumers.

In late 2021, the U.S. Department of Justice filed an antitrust lawsuit to try to block the deal. U.S. Attorney General Merrick Garland said the deal, if left unchecked, would give the world's largest book publishers unprecedented control over the industry, reducing authors' remuneration and consumer access to less book diversity. The move has also received support from within the industry. According to a recent report by literary website Lithub, the famous writer Stephen King will testify on behalf of the U.S. Department of Justice against the acquisition.

Stephen King, writer and screenwriter, representative works include "The Shining" and "The Shawshank Redemption".

On August 1, local time, the trial of the case began in Washington, D.C., and is expected to last three weeks.

According to Publishers Weekly, a document released on July 29 sparked some controversy. In testimony, Edward Snyder, an expert witness at Penguin Random House, said in testimony that while he claimed the acquisition would bring an "identifiable market," he did not conduct an independent test of the data used, which was based on a report by Manuel Sansigre, penguin Random House's global acquisition head, and Nihar, president of Penguin Random House USA Malaviya）。 Attorneys for the Justice Department said that accordingly, some of Snyder's testimony should be dismissed. Penguin Langdon also questioned this view.

Lawyers for Penguin Random said the acquisition would create better market efficiency, and the combined publishers would be able to generate incentives for other publishers and push "other publishers to compete harder for author resources," a move that would provide authors with "better offers and remuneration." Lawyer Daniel Petrocelli countered in their briefing that the deal would create efficiencies and "enable the combined entity to offer better offers to more authors," adding that the Justice Department lawsuit misunderstands "dynamic competition and many other factors" and that the acquisition will benefit both readers, publishers and authors.

At the end of 2021, Markus Dohle, CEO of Penguin Random House, expressed a similar view that the publishing industry has always been in an era of "fragmentation". Although Penguin Random occupies a larger publishing share, small publishers and independent publishers with characteristics have advantages that large publishers do not have in their respective segments. They also questioned data from justice department charges, noting that the combined share of print sales by the two publishers had declined. In a July report in The New York Times, the deal also gave Simon and Schuster's authors simultaneous access to the supply chain and distribution network on the tip of Penguin Random's roof.

Reference Links:

（1）DOJ Trial to Block PRH/S&S Merger Begins; Evidence Dispute Looms

https://www.publishersweekly.com/pw/by-topic/industry-news/publisher-news/article/89990-doj-trial-to-block-prh-s-s-merger-begins-evidence-dispute-looms.html

（2）Stephen King to testify against the giant PRH-Simon & Schuster merger.

https://lithub.com/stephen-king-to-testify-against-the-giant-prh-simon-schuster-merger/

（3）Authors fear the worst if Penguin owner takes over Simon & Schuster

https://www.theguardian.com/books/2021/mar/22/authors-fear-the-worst-if-bertelsmann-takes-over-simon-schuster

（4）Will the Biggest Publisher in the United States Get Even Bigger?

https://www.nytimes.com/2022/07/31/books/penguin-random-house-simon-schuster-antitrust-trial.html

Reporter Liu Yaguang

Edited by Luo Dong

Proofreading Liu Baoqing