Penguin Random House, the world’s largest book publisher, and rival Simon & Schuster have called off a $2.2 billion merger deal, the Penguin owner said in a statement Monday.
Bertelsmann, a German media group that owns Penguin, initially said it would appeal a US judge’s ruling that its purchase of Simon & Schuster would be illegal because it would hit the authors’ salaries.
But Bertelsmann said in a statement on Monday that it will “advance the growth of its global book publishing business without the previously planned merger of Penguin Random House and Simon & Schuster.”
Reuters reported on Sunday that the German company failed to convince Paramount Global, the owner of Simon & Schuster, to extend its deal and appeal the judge’s decision.
Judge Florence Pan of the U.S. District Court for the District of Columbia ruled Oct. 31 that the Justice Department demonstrated the deal could significantly lessen competition “in the market for U.S. publishing rights to the most popular books.” sold”.
With the dissolution of the agreement, Penguin will pay a termination fee of $200 million to Paramount.
Paramount said Monday that Simon & Schuster was a “non-core asset” for Paramount. “It is not video-based and therefore does not fit strategically into Paramount’s broader portfolio,” the company said in a filing about the termination of the deal.
The Justice Department did not immediately respond to a request for comment.
Unlike most merger fights, which focus on what consumers pay, the Biden administration argued the deal should be stopped because it would lead to less competition for bestselling books and more advances. low for authors earning $250,000 or more.
The decision comes as the Biden administration has made clear that it intends to tackle what it sees as monopoly positions, blaming them, among other things, for rising meat prices and soaring concert ticket prices.
The book industry has seen a series of consolidations in recent years and critics feared another big merger would reduce competition while making life harder for smaller publishers.
Penguin is already by far the largest US publisher. Its authors include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steel, while Simon & Schuster publishes Stephen King, Jennifer Weiner and Hillary Rodham Clinton, among others.
The US Department of Justice filed a lawsuit seeking to terminate the agreement in November 2021.
In hearings held in August, the government argued that the five largest publishers control 90% of the market, and that a combined Penguin and Simon & Schuster would control almost half of the book publishing rights market at success, while its closest competitors would be less than half its size.
King, author of bestsellers including The Stand and The Shining, was among the authors and agents who testified at the trial, arguing it would lessen competition.
“You might as well say you’re going to have a husband and wife bidding against each other for the same house. It’s kind of ridiculous,” King told the court. “Consolidation is bad for competition.”
Reuters contributed to this story