Will the Biggest Publisher in the United States Get Even Bigger?

Last fall, the Biden administration sued to block the $2.18 billion sale as part of its new and more aggressive stance against corporate consolidation. The trial will start on Monday, with oral arguments at the United States District Court for the District of Columbia, where Judge Florence Pan will preside.

The Justice Department and Bertelsmann, Penguin Random House’s parent company, called a parade of high-profile publishing executives as witnesses. They include Markus Dohle, the chief executive of Penguin Random House, and Jonathan Karp, the chief executive of Simon Schuster, as well as executives from other publishing houses, literary agents and a handful of authors.

Here is what we know about the case and its implications for the book business.

Why is the government trying to block this deal?

The Justice Department says this merger would make for too much consolidation in the publishing industry, creating what’s called a monopsony. A monopoly refers to a seller that has too much power over consumers; a monopsony has too much power over suppliers. In this case, the government says, those suppliers are authors of books expected to be top sellers, which publishers buy for advances of more than $250,000.

The Biden administration says that by shrinking the number of big publishers — which have the budgets to most frequently compete for the biggest books — there would be less competition for those titles. That, in turn, would lower advances paid to their authors. As a result, “fewer authors will be able to earn a living from writing,” the Justice Department argued in a pretrial brief.

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