On Monday, the District of Columbia District Court issued an order and sealed opinion blocking publisher Penguin Random House’s proposed acquisition of competitor Simon & Schuster in the case United States of America v. Bertelsmann Se & Co. KGAA et al.
On November 25, 2020, a planned merger was announced in which Penguin Random House, LLC, which is owned by Bertelsmann, would acquire the competing publisher Simon and Schuster, Inc. for $2.18 billion from Viacom CBS, Inc. In November 2021 the Department of Justice filed a lawsuit under Section 7 of the Clayton Act to stop the proposed merger arguing that the acquisition would decrease competition hurting consumers and authors.
Through the order, the court stated that the DOJ showed that the proposed merger would substantially decrease competition in the market of publishing rights to anticipated top-selling books in the United States. The court’s order followed a thirteen-day trial that occurred in August 2022.
The court states that its reasoning is laid out in an accompanying opinion which is currently under seal because it contains confidential information. Further, the order purports that the parties have until November 4, 2022, to jointly file proposed redactions to the opinion.
In a press release the DOJ states that the decision “protects vital competition for books and is a victory for authors, readers, and the free exchange of ideas.” Further, it argues that the proposed merger would have reduced competition in the market and author compensation and “ultimately impoverished our democracy.” More broadly, the DOJ states that the decision “reaffirms that antitrust laws protect competition for the acquisition of goods and services from workers.”
Shearman & Sterling LLP represented Viacom CBS and Simon and Schuster in the acquisition and litigation, while Bertelsmann and Penguin Random House are represented by O’Melveny & Myers LLP and Arnold & Porter.
