Authors Guild steps up efforts to challenge publisher merger

The Authors Guild has thoroughly reviewed the Justice Department’s antitrust lawsuit against the mega-merger of Penguin Random House and Simon & Schuster and is doubling down on its support for the federal court challenge that was filed Tuesday.

“The Authors Guild has argued for many years with the DOJ and FTC that consumers are harmed when authors’ incomes decline because authors have to take on other work and write less or not at all,” a the guild said in a position paper released on Friday.

“Furthermore, as we explained in our letter to the DOJ earlier this year, ‘The book publishing industry plays a particularly important role in protecting democratic freedoms of speech and expression, which in turn makes anti-monopoly enforcement of utmost importance.'”

The guild noted that the DOJ’s complaint “demonstrates an understanding” of how the proposed merger would affect the publishing industry’s already limited competition. There are only five large, dominant publishers now, and the merger would make four.

“The proposed merger would allow the merged company and the few remaining competitors to pay less and extract more from authors who often work for years in their craft before producing a book,” the guild noted. “By reducing authors’ salaries, the merger would make it more difficult for authors to earn a living by writing books, which, in turn, would lead to a reduction in the quantity and diversity of books, which in turn hurts consumers.”

Penguin Random House responded to the guild’s statement on Friday with its own statement, promising that the merger would not affect advances or royalties.

“As the best stewards of Simon & Schuster’s diverse imprints, Penguin Random House acquisition editors will continue to work with a wide range of authors, ideas and communities,” the statement added. “We look forward to continuing our long history of working with the Guild and its members. »

The fear of reduced competition stems from the practice of publishing houses to prevent constituent divisions or publishers from bidding against each other for new books at auction. At Penguin Random House, born from the merger of Random House and the Penguin Group in 2013, divisions have been allowed to compete at auctions only when outside bidders are also involved.

Earlier this week, Penguin Random House and Simon & Schuster said in a joint statement that the imprints would be allowed to bid against each other after the deal closes.

“PRH agrees to maintain the footprints of S&S as external bidders separate from the footprints of PRH in auctions after closing [of the merger]just as they do today, even if they are the only ones left in an auction (up to an advance level well over $1 million),” Tuesday’s joint statement read.

The Authors Guild has particularly focused on authors who may not produce bestsellers.

“Consolidation not only stifles competition, it also makes acquisition publishers less willing to take risks on emerging or in-between authors, voices from overlooked and marginalized communities, authors with unusual or controversial ideas, and writers literary works that challenge the status quo in both content and style,” he said. “Yet it is only by pushing those boundaries that literature and society move forward.”

Simon & Schuster was put on the block by ViacomCBS in March 2020, just before the pandemic hit the United States seriously, and Penguin Random House’s proposed purchase of the publisher for $2.2 billion was announced nearly a year ago. The Authors Guild weighed in on the mega-deal in January, writing a letter to the DOJ asking it to block the consolidation.

“The takeover clearly falls within the standard of illegality set by the Clayton [Antitrust] Act and should be summarily dismissed,” the guild wrote at the time, citing the 1914 law that prohibits anti-competitive mergers, price-fixing and other unethical business practices. Antitrust laws generally require transactions with large corporations to be reviewed and approved by the Federal Trade Commission and the DOJ before they are finalized.

On Tuesday, the United States filed an antitrust lawsuit seeking to block the merger.

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

Jonathan Karp, president and chief executive of Simon & Schuster, called the news of the lawsuit “disturbing” in a memo to staff obtained by The Times. He said his company and Penguin Random House would work together to fight the government lawsuit.

“Notably, the DOJ has not alleged that the acquisition would harm competition in the sale of books,” Karp said in the memo. “Simon & Schuster and Penguin Random House strongly disagree with the DOJ that this transaction will harm competition and strongly believe that these claims are without merit.”

Writer Dorany Pineda contributed to this report.