On October 31st, the federal court blocked Penguin Random House’s acquisition of Simon & Schuster. Both parties have until November 4th to file their proposed reactions, after which the court will issue a public version of Judge Florence Y. Pan’s memorandum opinion. Until then, potential confidential information is being protected.
“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 to substantially to lessen competition’ in the market for the U.S. publishing rights to anticipated top-selling books,” Pan’s order states. “Accordingly, judgment shall be entered in favor of the Plaintiff and the merger shall be enjoined.”
Enjoined, in law terms, means to prohibit someone from performing a particular action by issuing an injunction (Google).
The U.S. Justice Department defended the decision, believing that the merger would have reduced competition, decreased author compensation, diminished the breadth, depth, and diversity of our stories and ideas, and ultimately impoverished our democracy, according to assistant attorney general Jonathan Kanter of the Antitrust Division.
Penguin Random House’s CEO, Markus Dohle, issued a statement regarding the blocking, insisting that the merger is “pro-competitive” and would ensure “fair competition.”
Dohle also said that the ruling was political in nature, which led to him considering an appeal. “I think the ruling is utterly wrong,” he said. “We would have been able to sell more Simon & Schuster titles than they would have been able to sell on their own.”
By merging both PRH and S&S, the companies would have represented 20% of the overall book market combined, whereas Amazon represents over 50% in the retail market, according to Dohle.
Simon & Schuster’s CEO, Jonathan Karp, expressed his disappointment at the ruling. In his statement to the company, Karp explained that despite the news, the company will continue to thrive.
“I am sure that you are eager to know what the future holds for Simon & Schuster. As you may have heard, Penguin Random House has announced its intention to request an expedited appeal of the ruling,” Karp addressed. “We are reviewing the decision and discussing the next steps with Paramount, Bertelsmann, and Penguin Random House.”
Read more about the merger through Publisher’s Weekly.