Skip to main content

Federal Judge Hands DOJ Major Antitrust Win, Blocks Penguin Random House and Simon & Schuster from Moving Forward with Billion-Dollar Merger

Penguin Random House, Simon & Schuster merger blocked

The Penguin logo is visible on the cover of a book displayed on a shelf at Book Passage on November 02, 2021 in Corte Madera, California. The U.S. Department of Justice is suing Penguin Random House and Simon & Schuster to block the companies from completing a merger valued at $2.175 billion. 

A federal judge in Washington, D.C. handed the U.S. Department of Justice a major antitrust win by blocking publishing giants Penguin Random House and Simon & Schuster from moving forward with their proposed $2.2 billion merger.

U.S. Circuit Judge Florence Pan, recently appointed by President Joe Biden to the federal appellate bench, issued the order Monday while sitting by designation in the U.S. District Court for the District of Columbia.

“This matter comes before the Court after a trial on the merits in the United States’ suit to enjoin the merger of Penguin Random House, LLC, and Simon & Schuster, Inc., under Section 7 of the Clayton Act. See 15 U.S.C. § 18. 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 substantially to lessen competition’ in the market for the U.S. publishing rights to anticipated top-selling books,” the judge ruled.

The ruling came down more than a month after a late-summer trial. The DOJ said trial went on for 13 days in August.

Unfortunately, as Pan noted, the judge’s reasoning behind blocking the merger is currently under seal and will remain so until the court receives proposed redactions from the parties. The judge said the parties have until this Friday to submit proposed redactions for any confidential information in the memorandum opinion.

“Accordingly, judgment shall be entered in favor of the Plaintiff and the merger shall be enjoined. The Court’s reasoning is set forth in the accompanying Memorandum Opinion, which is issued under seal because it contains ‘confidential information’ and/or ‘highly confidential information,’ as defined in the Stipulated Protective Order,” Pan wrote. “The parties shall meet and confer and will jointly file proposed redactions to the Memorandum Opinion by November 4, 2022. After considering the proposed redactions, the Court will issue a public version of the Memorandum Opinion.”

In the meanwhile, Pan, who succeeded Justice Ketanji Brown Jackson in the D.C. Circuit, ordered the merger blocked and ordered the publishers to “take any and all necessary steps to prevent any of their officers, directors, domestic or foreign agents, divisions, subsidiaries, affiliates, partnerships, or joint ventures from consummating, directly or indirectly, any such merger.”

The DOJ’s Antitrust Division celebrated the blocking of Penguin Random House’s acquisition of Simon & Schuster as a win for competition.

“Today’s decision protects vital competition for books and is a victory for authors, readers, and the free exchange of ideas,” Assistant Attorney General Jonathan Kanter said in a statement. “The proposed merger would have reduced competition, decreased author compensation, diminished the breadth, depth, and diversity of our stories and ideas, and ultimately impoverished our democracy.”

“The decision is also a victory for workers more broadly,” Kanter continued. “It reaffirms that the antitrust laws protect competition for the acquisition of goods and services from workers.”

[Image via Justin Sullivan/Getty Images]

Have a tip we should know? [email protected]

Filed Under:

Follow Law&Crime:

Matt Naham is the Senior A.M. Editor of Law&Crime.