WASHINGTON (AP) 鈥� A federal judge has laid out a data-laden case for why she , handing a victory to the Biden Justice Department in its contention that combining two of the world鈥檚 biggest publishers would hurt competition for top-selling books.
In her ruling filed Monday, U.S. District Court Judge Florence Pan also waved off as not relevant the publishers鈥� assertion that Penguin Random House would be the best 鈥渉ome鈥� for Simon & Schuster and that other buyers 鈥� notably private equity firms 鈥� could destroy it. That argument isn鈥檛 relevant to the case and her decision, Pan wrote, which turns only on the issue of how the merger would affect competition.
Pan announced her ruling in a brief statement last week, keeping the bulk of it under seal because of confidentiality issues. The full ruling issued this week delves into the data of publishing-market dynamics, replete with charts and graphs. Some company-related material is redacted.
鈥淭he government has presented a compelling case that predicts substantial harm to competition as a result of the proposed merger,鈥� Pan wrote. 鈥淭he post-merger concentration of the relevant market would be concerningly high: The merged entity would have a 49% market share, more than twice that of its closest competitor.鈥�
The merger 鈥渋s likely to substantially lessen competition in the market for the publishing rights to anticipated top-selling books," Pan wrote.
Penguin Random House, owned by German conglomerate Bertelsmann, is the biggest book publisher in the U.S., as Pan laid out in her ruling. She noted that Simon & Schuster, whose parent is New York-based media giant Paramount Global, is the third-largest U.S. publisher.
Penguin Random House last week called the ruling 鈥渁n unfortunate setback for readers and authors鈥� and said it will request an expedited appeal in federal court.
Pan's ruling was a victory for the Biden administration鈥檚 tougher approach to proposed mergers, a break from decades of precedent under Democratic and Republican leadership.
The Justice Department declined further comment Tuesday on Pan鈥檚 decision. Simon & Schuster and Paramount declined to comment.
Pan鈥檚 ruling was not surprising. Through much of the three-week non-jury federal trial in August, she had indicated agreement with the Justice Department鈥檚 contention that Penguin Random House鈥檚 plan to buy Simon & Schuster for $2.2 billion might damage a vital cultural industry.
But it was still a dramatic departure from recent history in the book world and beyond. The publishing industry has been consolidating for years with little interference from the government, even when Random House and Penguin merged in 2013 and formed what was then the biggest publishing house in memory. The joining of Penguin Random House and Simon & Schuster would have created a company far exceeding any rival.
The 鈥淏ig Five鈥� companies __ the others are Hachette, Macmillan and HarperCollins 鈥� publish 91% of anticipated top-selling books, Pan noted in her ruling.
In her 80-page opinion, Pan conjured literary history, opening with a nod to John Steinbeck 鈥� the 鈥淕rapes of Wrath鈥� author whose publisher was Viking Press, now owned by Penguin Random House.
鈥淛ohn Steinbeck famously said, 鈥業 guess there are never enough books,鈥欌�� Pan wrote. 鈥淗e apparently meant that in the figurative sense, as a comment on the power of books to educate, to enrich and to explore. But today, his statement also rings true in the economic sense: The retail market for books in the United States was over $11.5 billion in 2019 and has only continued to expand.
鈥淧eople want to read. And book publishers have the enormous power and responsibility to decide which books 鈥� and therefore which ideas and stories 鈥� will be made broadly available to the public," she added.
Marcy Gordon, The Associated Press
