📚Penguin Random House Questions The DOJ's Reading Of The Law

The proposed acquisition of Simon & Schuster by rival Penguin Random House, two giants in the book publishing world, will actually benefit most authors, a joint statement by the companies said. The statement is part of a response by Penguin Random House to a Justice Department lawsuit that would block the $2.18 billion deal from going through. The response was filed at the United States District Court for the District of Columbia.

• “American authors and consumers will pay the price of this anti competitive merger — lower advances for authors and ultimately fewer books and less variety for consumers," US Attorney General Merrick Garland said in a statement regarding the DOJ's lawsuit, reports the New York Times. 

• A lawyer for Penguin Random House noted, however, that the DOJ's theory is not only misguided, but "legally, economically and factually wrong, and it ignores the vast majority of authors who will indisputably benefit from the transaction.”

• Bertelsmann, Penguin Random House's parent company, has bet big on this acquisition and stands to get a critical blow to its bottom line should this deal not go through.

A New Strategy

The DOJ has traditionally argued in antitrust cases that a proposed merger or acquisition would harm consumers by giving them less choice and likely higher prices. However, with this case, the Justice Department is instead arguing not that book prices will rise, but that authors will have few players competing in a bidding war over their books, and will thus receive lower advances.

The Verdict

Should the DOJ succeed in blocking this mega-merger, it may have a new precedent to wield in future antitrust cases. Best-selling authors will keep a few extra bucks in their pocket too.