Not sure if it’d make the cut for a John Grisham legal thriller, but a spicy court battle in the world of book publishing is going down today—and it’s a major test for the Biden administration’s competition crackdown.
A trial will begin Monday over the proposed $2.2 billion merger of Penguin Random House and Simon & Schuster. The DOJ has sued to block it on antitrust grounds, arguing that the deal would not only raise book prices for consumers, it would also disadvantage authors by reducing their bargaining power for advances of more than $250,000. Even Stephen King will leave his writing dungeon to testify as a witness for the government.
Big picture: The publishing world is more exclusive than your roommate’s book club. Five publishers account for 90% of the market for anticipated top-selling books, and a combined Penguin Random House–Simon & Schuster would reduce that number to four, with the new company being the clear leader.
- Among its roster of celeb authors, Penguin Random House has the Obamas, Bill Clinton, and novelist John Grisham.
- Simon & Schuster has Hillary Clinton, journalist Bob Woodward, and prolific biographer Walter Isaacson.
Combined, the two publishers made up 49% of the top 100 best-selling print books last year, per NPD BookScan.
The other side: The publishers want you to think of all the ~synergies~ that would be unleashed when combining Simon & Schuster’s powerhouse authors with Penguin Random House’s expertise in getting books on shelves. They reject the government’s accusations that their merger would reduce competition and argue that the book publishing world is far more vast than just the “Big Five,” pointing to Amazon and Disney as influential publishers in their own right.
Why this matters: On the surface, a $2.2 billion merger in the obscure world of book publishing may not seem like it would draw the attention of the government’s antitrust act. But Biden has made fighting corporate consolidation a major focus of his economic policy, and the contention that mergers could harm workers, and not just consumers, represents a new front in this crusade. A decision in the publishing case could inform other ongoing legal battles, such as mixed martial artists who’ve sued the UFC for allegedly using its market power to depress wages.
