Judge Blocks Penguin Random House From Acquiring Rival Simon & Schuster

A general view of a collection of Penguin books on display. Ben Pruchnie/Getty Images

A federal judge has blocked publisher Penguin Random House from acquiring rival Simon & Schuster Inc. for $2.175 billion, ruling in favor of the Justice Department.

“Upon review of the extensive record and careful consideration of the parties’ arguments, the Court finds that the United States has shown that ’the effect of [the proposed merger] may be substantially to lessen competition' in the market for the U.S. publishing rights to anticipated top-selling books,” Judge Florence Y. Pan wrote in a two-page order.

A memorandum of opinion that outlines the reasons for the decision has been issued but is under seal and will be released publicly when the two publishes agree on what information should be redacted. The publishers have until Nov. 4 to file the proposed redactions to the memorandum opinion.

The ruling comes in an antitrust lawsuit the Justice Department filed in November 2021 seeking to block the merger. The department argues that the acquisition would enable Penguin Random House “to exert outsized influence over which books are published in the United States and how much authors are paid for their work.”

“Simply put, if Penguin Random House acquires Simon & Schuster, the two publishers will stop competing against each other," the Justice Department said in its complaint (pdf). “As a result, authors will be paid less for their work. Authors who are paid less write less, which, in turn, means that the quantity and variety of books diminishes too.”

At the time, Attorney General Merrick Garland said in a statement that the lawsuit reflects the department’s “commitment to pursuing economic opportunity and fairness through antitrust enforcement.” He added: “If the world’s largest book publisher is permitted to acquire one of its biggest rivals, it will have unprecedented control over this important industry.”

Penguin is the largest book publisher in the United States, owned by German media company Bertelsmann SE. Simon & Schuster is the fourth-largest and is owned by Paramount Global (formerly called ViacomCBS). Five publishers control the publishing industry in the United States, taking up about 80 percent of the market for books in the country. The other three publishers are HarperCollins, Hachette Book Group, and Macmillan.

“We strongly disagree with today’s decision, which is an unfortunate setback for readers and authors, and we will immediately request an expedited appeal,” a spokesperson for Penguin Random House told multiple outlets. The spokesperson added that Penguin Random House regards the merger as “pro-competitive.”

Simon & Schuster did not immediately respond to a request for comment.