US asks judge to block merger of book publishers at end of trial

The United States Department of Justice (DOJ) crest is seen at its headquarters in Washington, DC, USA REUTERS/Andrew Kelly

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WASHINGTON, Aug 19 (Reuters) – The U.S. Justice Department on Friday urged a U.S. judge to block a $2.2 billion merger between two of the “big five” book publishers, saying “competition is important” and said the industry should not be treated any differently than anyone else.

Last year, the Department of Justice filed a lawsuit to stop Penguin Random House, the world’s largest book publisher and owned by German media group Bertelsmann SE & Co KGaA, from buying rival Simon & Schuster at Paramount Global (PARA.O). Read more

U.S. District Judge Florence Pan is expected to issue a written ruling in the coming months after both sides file post-trial briefs.

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The five largest publishers control 90% of the market, and the combined company would control about half, the government said.

“It’s not about love of books,” Justice Department lawyer John Read said in court. “There is no doubt that Penguin will be more dominant than it already is” if the merger is successful.

Read said it’s extremely difficult for smaller rivals to break through when the top five publishers hold 90% of the market. “Even Amazon hasn’t succeeded,” Read said of the online retailer that has scaled back its publishing ambitions.

The government argued the deal would lead to lower advances for authors earning $250,000 or more, rather than citing the typical reasoning that consumers would pay more. Read more

Penguin Random House attorney Daniel Petrocelli said the merger would have “tremendous benefits” for readers and authors.

Best-selling author Stephen King, who testified during the three-week trial, challenged promises the companies made to allow Simon & Schuster imprints, essentially different book brands, to continue bidding against Penguin Random House independently for books.

“You might as well say you’re going to have a husband and wife bidding against each other for the same house. That’s kind of ridiculous,” King told the court.

Petrocelli said in his closing arguments that competition among publishers is “good for business” and “increases their chances of winning the book.”

The government argued that reduced pay would lead to fewer authors staying with the company and fewer stories being told. The publishers flatly rejected the idea that the biggest booksellers would be able to cut advances if the merger was approved.

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Reporting by David Shepardson; Editing by Richard Chang

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