The Department of Justice sued to stop the acquisition on the grounds that it would hinder competition in the market for what it called “anticipated top-selling books” and lead to lower advances for authors. The trial was not about whether the deal would create a monopoly, but about whether it would lead to a monopsony, or too much control over suppliers — in this case, top-selling writers.
Penguin Random House and its parent company, Bertelsmann, argued that efficiencies created by the mergers would allow the company to pay authors more, not less, and it said the government was focusing on a very narrow slice of books at the top of the market.
“This transaction would benefit both Penguin Random House and Simon & Schuster by helping writers at all levels better share their stories with as many readers as possible through our industry-leading supply chain,” Markus Dohle, the chief executive of Penguin Random House, said in a letter to employees sent after the ruling Monday night. “As it’s also my belief that the best long-term home for Simon & Schuster is a like-minded organization with a proud publishing history, I know we are their best possible steward.”
Judge Pan, who heard the case in the United States District Court for the District of Columbia, sided with the Biden administration.
After the decision was issued, groups that had criticized the deal, including the Authors Guild and the American Booksellers Association, celebrated what they saw as a victory for writers and for the industry overall.
“This is a judgment that really took authors into consideration, and without authors, there would be no books,” said the novelist Douglas Preston, the president of the Authors Guild. “The ruling is important not just for authors and the book business but really for the free flow of ideas in society.”
For Simon & Schuster, the collapse of the deal would leave it once again facing the uncertainty of a sale, after more than two years in limbo. In a letter sent Monday night, Jonathan Karp, the company’s chief executive, sought to reassure Simon & Schuster’s staff. “Despite this news, our company continues to thrive,” he wrote. “We are more successful and valuable today than we have ever been.”
Source: | This article originally belongs to Nytimes.com
