The UK’s competition regulator announced that it is investigating Penguin Random House’s proposed acquisition of rival publisher Simon & Schuster, reported The Wall Street Journal.
The Competition and Markets Authority is examining the proposed merger on the grounds it may lessen competition, and stated it would decide by May 19 whether to proceed to a second phase, signaling more intense concerns over competition.
Last November, Penguin Random House’s parent, German media giant Bertelsmann, agreed to acquire Simon & Schuster from ViacomCBS for almost US$2.18 billion.
Penguin Random House is the world’s largest consumer book publisher, with a roster that includes bestselling authors such as John Grisham and Dan Brown.
At the time the deal was announced, Markus Dohle, chief executive of Penguin Random House, said it shouldn’t raise competition concerns, and noted that over the past decade many small new publishers emerged. “There have been a lot of new successful entrants in the market,” he said.
Penguin Random House UK stated it is cooperating with the probe. Bertelsmann has said the transaction, subject to regulatory approvals, is expected to close this year.
The proposed merger has faced opposition from agents and a leading trade group for authors, who have argued that the deal would give too much market power to Penguin Random House.
The Authors Guild claimed that the resulting company “would account for approximately 50% of all trade books published, creating a huge imbalance in the US publishing industry.” The Guild also stated that book advances for authors would decline over time because there would be fewer bidders for their books.
