Antitrust: US DOJ Sues To Block Simon & Schuster’s $2B Sale

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The United States Justice Department is back on its antitrust crosshairs, seeking to block a merger that it deems cornering the market. The agency has filed a lawsuit to block the sale of Simon & Schuster, a book publishing house, to its rival Penguin Random House.

Last November, Penguin Random House agreed to buy Simon & Schuster from its current owner, the media conglomerate ViacomCBS (NASDAQ: VIAC). The purchase price was $2.2bn
  • It now appears that the US Justice Department wants to interfere in the sale on antitrust grounds. The agency says Penguin Random House would exert “outsized influence” on the American book publishing market if it succeeds in buying Simon & Schuster.
  • The DOJ has a reasonable point to argue with. Acquiring Simon & Schuster would make Penguin Random House the largest book publisher in America with great influence. The agency says such great influence would give Penguin Random House too much control over how much American authors are paid for their work.
  • The American book publishing market is already one where power is hugely concentrated at the top. Five giant publishers are controlling the scene, fondly called the “Big Five”, and Penguin and Simon & Schuster are included. The proposed acquisition would trim that down to “Big Four”, concentrating even more power.
  • The DOJ has filed a lawsuit in the U.S. District Court for the District of Columbia. Like all antitrust cases, the parties being sued have the right to defend their case against the DOJ’s, and the final decision will be made by a judge. Sometimes, companies don’t find it worthwhile to fight an antitrust lawsuit from the DOJ, and they call off their merger, e.g. Visa-Plaid
  • The DOJ under the Biden administration has increased its focus on antitrust cases compared to the former Trump administration. Some recent antitrust lawsuits the agency has picked up include suing to block the merger of insurance giants Aon and Willis Towers Watson, which it successfully did, and suing to block a recent partnership between JetBlue and American Airlines.
Penguin Random House is owned by Bertelsmann, a German media conglomerate. The book publishing giant reported $2.4bn in revenue in 2019. Simon & Schuster is a smaller book publisher compared to Penguin, with $760mn in 2019 revenues.

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