Full PRH S&S Antitrust Decision

Judge Florence Pan has now issued her full decision blocking the proposed merger of Penguin Random House and Simon & Schuster, following her brief announcement last week.

Her 80-page decision reveals that she had significant reservations about the merger from the start, and did not find the PRH and S&S arguments in favor of the deal convincing. Her conclusion reads,

The government has presented a compelling case that predicts substantial harm to competition as a result of the proposed merger of PRH and S&S. It has properly defined a relevant market — focused on the publishing rights for anticipated top-selling books — that encompasses 70 percent of the advances that publishers pay to authors. The post-merger concentration of the relevant market would be concerningly high: The merged entity would have a 49-percent market share, more than twice that of its closest competitor [HarperCollins]….

The defendants have failed to show that the relevant market is not well defined; have failed to establish that the market-share data inaccurately reflects market conditions; and have failed to rebut the government’s affirmative evidence of anticompetitive harm… The Court is unpersuaded by the defendants’ arguments that the market-share does not accurately reflect conditions in the relevant market because it does not account for constraints that would be imposed by exiting and new competitors, literary agents, and internal imprint competition.

The full decision may be read at Publishers Weekly.

The $2.2 billion deal was first announced nearly two years ago, with the Department of Justice objecting on antitrust grounds and filing a lawsuit to stop the deal last year.

The future of Simon & Schuster remains unclear, with The Wall Street Journal speculating over whether parent company Paramount will wait for the results of an appeal or seek another buyer.

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