Publication Giant Birth in Jeopardy... Ministry of Justice Blocks Merger of US 1st and 3rd Largest Publishers

Penguin Random House and Simon & Schuster Merger
Antitrust Lawsuit Filed by the Department of Justice
Reflecting the Biden Administration's Stance
Close Attention on Future Impact on Large Corporate Mergers

[Asia Economy Reporter Kwon Jae-hee] The U.S. Department of Justice, the country's regulatory authority, has filed an antitrust lawsuit against the merger of the first and third largest publishers, Penguin Random House and Simon & Schuster. This reflects the Biden administration's stance to curb the market dominance of large corporations and is drawing attention as it could impact future mergers and acquisitions of other giant companies such as big tech firms.

According to major foreign media on the 2nd (local time), the Department of Justice filed an antitrust lawsuit against the plan for Penguin Random House to acquire Simon & Schuster for $2.175 billion (approximately 2.4 trillion KRW).

According to the complaint submitted by the Department of Justice to the U.S. District Court in Washington, "Books have historically shaped American public life, and authors are the lifeblood of the U.S. publishing industry," adding, "If the world's largest publishing company acquires one of its major competitors, it will wield unprecedented influence in the publishing industry."

The Department of Justice further stated, "The merger of the two companies will suppress the development of the book market and cause substantial harm not only to authors but ultimately to consumers."

Penguin Random House, the number one U.S. publisher owned by Germany's Bertelsmann, announced last November that it would acquire Simon & Schuster, the third largest publisher, for $21.75 billion. This would create a giant publisher controlling one-third of the U.S. publishing market, raising concerns among some observers.

Lorraine Shanley, president of consulting firm Market Partners International, pointed out, "If the two publishers merge, they will control a very large portion of the book distribution market," adding, "It will become increasingly difficult for small and medium-sized publishers as well as other large publishers to compete."

Simon & Schuster has published numerous books by world-renowned bestselling authors such as Bob Woodward, the Watergate investigative journalist, including 'Rage,' former President Donald Trump's memoir, former National Security Advisor John Bolton's 'The Room Where It Happened,' as well as works by Stephen King, Bob Woodward, Dan Brown, and John Grisham.

Penguin Random House is known for publishing former U.S. President Barack Obama's memoir 'A Promised Land' and the autobiography of his wife, Michelle Obama, titled 'Becoming.'

According to The New York Times (NYT), combined sales revenue of these two publishers accounts for 20% of the entire market based on the U.S. Publishers Association standards, with a market share approaching 27%. In terms of sales volume, the market share of the two publishers far exceeds one-third. According to NPD BookScan, which tracks sales volume, Penguin Random House accounted for about 25% of the U.S. book market last year. If Simon & Schuster (9.1%) is acquired, the market share would reach 35%. Statistics also show that as of 2019, 49% of hardcover bestsellers came from these two publishers.

This lawsuit has attracted attention as it follows President Joe Biden's signing of a comprehensive executive order in July aimed at eradicating anti-competitive practices and curbing the dominance of large corporations. This lawsuit, considered one of the major antitrust cases, reflects the changed attitude toward corporate mergers and acquisitions under the Biden administration. The executive order includes a total of 72 individual measures targeting not only the information technology (IT) sector, including big tech companies like Amazon and Facebook, but also healthcare and banking. There are concerns that this order will trigger greater scrutiny of corporate mergers and acquisitions within the U.S. in the future.

Both companies strongly opposed the Department of Justice's lawsuit. Penguin Random House and Simon & Schuster stated in a joint statement, "Blocking the merger harms the very authors the Department of Justice claims to protect," adding, "We will fight the lawsuit."

Meanwhile, Penguin Random House is reported to have hired attorney Daniel Petrocelli, who handled the $80 billion merger case of AT&T and Time Warner, for this lawsuit.

This content was produced with the assistance of AI translation services.