On August 1, the Department of Justice will begin a trial aimed at blocking the $2.1 billion sale of Simon & Schuster to Penguin Random House. It’s easy to look at this case, as my Puck partner Bill Cohan recently did, and mock how the Biden administration has decided to go to the mattresses to maximize the money paid up front to authors for book publishing rights. I mean, launching an antitrust war over book advances at a time of $5-a-gallon gas—seriously?!
That said, I’d argue that this case is potentially very significant, and maybe just as big as the government’s ongoing pursuits against Big Tech. OK, perhaps not quite as huge as the F.T.C.’s fight to break up Facebook, but nevertheless this case is a very important bid to sharpen regulatory teeth against so-called monopsony—that being any market where a single buyer dominates. Guess who cares about market consolidation of buyers? That would be anyone selling. Particularly, anyone selling labor services. That’s why unions throughout the nation will be following this trial closely. For many years, they’ve argued that the government should scrutinize proposed mergers for their impact on jobs; up until now, many antitrust cops have focused instead on the effect of mergers on consumer prices. In other words, there’s more on the line here than just book advances.
On Friday, the D.O.J. and Random House submitted their pre-trial briefs. Some of it’s under seal, but not everything. Witnesses for the government include bestselling author Stephen King, S&S chief Jonathan Karp, Hachette CEO Michael Pietsch, Macmillan CEO Don Weisberg and many other luminaries in the book business. Besides book executives, the defense plans to call top literary agents like Jennifer Walsh, Andrew Wylie, and Gail Ross plus The Power of Habit author Charles Duhigg. They will appear at a trial overseen by District Court Judge Florence Pan, and arguments will also be made in voluminous post-trial briefs. A decision should follow in autumn.