The Department of Justice puts workers first by publishing antitrust lawsuit

The Future. With the DOJ’s ongoing trial to stop the $2.18 billion merger between Penguin Random House and ViacomCBS’ Simon & Schuster, the agency may be redefining what is ground for antitrust litigation — specifically, expanding the scope of antitrust to consider how mergers and acquisitions affect workers. The publishing case is tiny compared to some of the deals happening in Hollywood, tech, and video gaming… but it could prove to be the precedent that governs all those deals moving forward.

Big Book
According to THR, with the DOJ’s ongoing trial to stop the merger between Penguin Random House and ViacomCBS’ Simon & Schuster, the agency may be redefining what is ground for antitrust litigation.

• The DOJ sued to block the merger not just because it could lead to fewer books for consumers at higher prices, but because the combined company would have “outsized influence over who and what is published and how much authors are paid for their work.”
• That’s because Penguin Random House is the biggest publisher in the world, and Simon & Schuster is the fourth largest in the U.S. — combined, they would control two-thirds of the American publishing market.
• So, the DOJ is presenting a “monopsony” case, in which “a single buyer dominates, allowing it to purchase labor under market value.”

The fear is that the potential mega publisher would make it harder for authors to negotiate fair advances (the primary way authors are paid) because there would be fewer publishers to bid against one another. Additionally, a merger would inevitably trigger layoffs, resulting in fewer editors the authors can even sell to.

Stephen King even took the stand as a voluntary witness this week to explain why “consolidation is bad for competition.” Talk about bringing out the heavy hitters.

Less for more
Of course, the publishers say this is all nonsense and take issue with a monopsony case being brought against them because antitrust should only focus on protecting consumers. But, just in case, Penguin CEO Markus Dohle announced that his company and Simon & Schuster could continue to bid against one another if the deal goes through. We’ll see how long that lasts.

And this case isn’t a one-and-done. The DOJ and the Federal Trade Commission are working on a joint public inquiry to “modernize” M&A guidelines through the lens of labor effects. This move could be a game-changing moment for the entire media landscape. In 2022, an industry-changing deal like the Disney acquisition of 20th Century Fox a few years ago would’ve never been allowed to pass so easily… and the Biden administration may be making sure it doesn’t happen again.