Trial began Monday with opening remarks in the merger case United States v. Penguin Random House. The US Department of Justice (DOJ) is challenging the recent purchase of publishing house Simon & Schuster by Penguin Random House as a violation of US antitrust law.
Penguin Random House began the purchase process of Simon & Schuster in 2021, followed quickly by the DOJ suit. Penguin Random House and Simon & Schuster are part of the so-called “Big Five” publishing companies and together commanded 51.3 percent of the market for best-selling hardcover books in 2021. The “Big Five” publishers commanded 91 percent of the market collectively. Penguin Random House boasts authors such as Henry Kissinger and Danielle Steele, with Simon & Schuster notably housing Stephen King, who is expected to testify at trial.
In the pre-trial brief on behalf of the DOJ, the government focused on author advances of over $250,000, claiming the merger would lower specifically best-selling authors’ income significantly. The brief goes on to claim that, “[d]efendants’ presumptively illegal proposed transaction would unite two powerhouses among the Big Five publishers and eliminate long standing competition that has benefited authors of anticipated top-selling books.”
Penguin Random House disputes this, claiming that, “acquisitions are about more than just the advance.” Penguin Random House goes on to claim that author’s ability to negotiate other things such as royalties and accelerated payments may actually be more competitive due to the merger. Penguin Random House also disputes the idea of market-share as a metric to determine whether a market is competitive, stating, “the merger at most reduces the number of publishers that pose a meaningful competitive threat in any given acquisition from ‘very many’ to ‘still very many, but one fewer.'”
The trial is likely to last two or three weeks, with King expected to testify Tuesday.