Monday, November 29, 2021

Authors Guild Doubles Publisher Merge Challenge

The Authors Guild has taken a close look at the Justice Department’s antitrust lawsuit against the mega-merger of Penguin Random House and Simon & Schuster, and has doubled its support for the federal lawsuit filed Tuesday.

“The Authors Guild has been proving to the DOJ and the FTC for many years that consumers suffer from lower income for authors because authors have to take other work and write less or not write at all,” said an official guild document released Friday.

“In addition, as we explained in our letter to the Justice Department earlier this year,“ the book industry plays a critical role in protecting democratic freedoms of speech and expression, which in turn makes antitrust enforcement extremely important. ”

The guild noted that the Justice Department’s complaint “demonstrates understanding” of how the proposed merger will affect the already limited competition in the publishing industry. There are now only five dominant large publishers, and the merger will bring four.

“The proposed merger will allow the combined firm and the few remaining competitors to pay less and receive more from authors, who often spend years working on their craft before releasing a book,” the guild said. “By lowering the wages of authors, the merger would make it harder for authors to make a living by writing books, which in turn would lead to a reduction in the number and variety of books, which subsequently harms consumers.”

Concerns about declining competition stem from the practice in publishers of restricting constituent divisions or publishers from bidding against each other for new books at auctions. At Penguin Random House, formed from the merger of Random House and the Penguin Group in 2013, divisions can only participate in auctions if external bidders are also involved.

In a joint statement on Tuesday, Penguin Random House and Simon & Schuster said that after the close of the deal, the publications will be allowed to trade against each other.

“PRH is committed to keeping S&S prints as separate external bidders from PRH prints at auctions after the close. [of the merger]as it is today, even if they are the only ones who stayed at the auction (up to a level exceeding $ 1 million), ”the statement said.

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The Authors Guild has given special attention to authors who may not be producing bestsellers.

“Consolidation not only stifles competition, but also reduces the willingness of acquiring editors to risk new or middle-listed authors, voices from undervalued and marginalized communities, authors with unusual or conflicting ideas, and writers who challenge the status quo. in content and style, “the message says. “However, literature and society only advance by expanding these boundaries.”

ViacomCBS blocked Simon & Schuster in March 2020, right before the pandemic hit the US, and nearly a year ago it announced a $ 2.2 billion purchase from Penguin Random House. The Authors Guild spoke about the mega deal in January, writing to the Justice Department asking them to block the consolidation.

“The takeover clearly falls within the standards of illegality set by Clayton. [Antitrust] Act and must be promptly rejected, ”the guild wrote at the time, citing a 1914 law prohibiting anti-competitive mergers, price fixing and other unethical business practices. Antitrust laws generally require large corporate transactions to be reviewed and approved by the Federal Trade Commission and the Department of Justice prior to completion.

On Tuesday, the US filed an antitrust lawsuit to end the merger.

“If the world’s largest book publisher is allowed to acquire one of its biggest competitors, it will gain unprecedented control over this important industry,” Atti said. General Merrick Garland said Tuesday in a statement. “American authors and consumers will pay the price of this anti-competitive merger — fewer advances for authors and, ultimately, fewer books and less variety for consumers.”

Jonathan Karp, president and CEO of Simon & Schuster, called the news of the lawsuit “disturbing” in a memo to employees received by The Times. He said his company and Penguin Random House will work together to counter the government’s lawsuit.

“Notably, the Justice Department did not claim that the acquisition would harm competition in the sale of books,” Karp said in a memo. “Simon & Schuster and Penguin Random House strongly disagree with the US Department of Justice that this deal will harm competition and strongly believe that there is no basis for these claims.”

Staff writer Dorani Pineda contributed to this report.

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