US government against billion dollar deal from Bertelsmann subsidiary – Economy

The US government wants to prevent the multi-billion dollar purchase of the US publisher Simon & Schuster by Bertelmann subsidiary Penguin Random House. The US Department of Justice filed a suit with the federal court in Washington on Tuesday. If the world’s largest book publisher is allowed to acquire one of its biggest competitors, it will have unprecedented control over the vital industry, Attorney General Merrick Garland said. Only five companies would control the US publishing industry anyway. Simon & Schuster is considered number four. Bertelsmann announced in 2020 that it wanted to buy Simon & Schuster from the US company Viacom for $ 2.175 billion. This should strengthen Penguin’s presence in the USA. Among other things, the novelist Stephen King, the Pulitzer Prize winner Anthony Doerr and the journalist Bob Woodward would be won. A takeover would have an overwhelming influence on who and what gets published and how authors are paid for their work, the plaintiffs said. Penguin Random House would hold almost half of the market for the publishing rights to blockbuster books after a merger, it said. The closest competitor is less than half that size. Penguin Random House and Simon & Schuster said they would vigorously fight the lawsuit. The market for the sale of books is fissured and the combined market share of both publishers is below worrying levels. When the purchase was announced almost a year ago, Bertelsmann boss Thomas Rabe had stated that he was confident that the competition watchdogs in the USA and in other countries would approve the project. Penguin Random House and Simon & Schuster would only have a combined share of sales of less than 20 percent in the USA. In addition, one must take into account that the online retailer Amazon is playing an increasingly important role in the book market.