United States v. Bertelsmann SE & Co.

United States v. Bertelsmann SE & Co.

Opinion

AMENDED MEMORANDUM OPINION

John Steinbeck famously said, "I guess there are never enough books." He apparently meant that in the figurative sense, as a comment on the power of books to educate, to enrich, and to explore. But today, his statement also rings true in the economic sense: The retail market for books in the United States was over $11.5 billion in 2019 and has only continued to expand. People want to read. And book publishers have the enormous power and responsibility to decide which books — and therefore which ideas and stories — will be made broadly available to the public. A publishers' marketplace of ideas is also a marketplace of book sales, production costs, and market share. It is this commercial market, so inextricably intertwined with the intellectual life of our nation, that the Court examines in this case.

Penguin Random House ("PRH") is by far the largest book publisher in the United States. Owned by Bertelsmann SE & Co. KGaA ("Bertelsmann"), an international media and services company, PRH [*5]  annually publishes over 2,000 new books in the U.S. and generates nearly $2.5 billion in revenue. Simon & Schuster, Inc. ("S&S"), owned by the media giant Paramount Global (formerly ViacomCBS), is the third-largest publisher in the U.S. S&S publishes about 1,000 new titles yearly and reported over $760 million in net sales in 2020.

In March 2020, ViacomCBS announced that it planned to sell S&S. Following a multi-round bidding process, Bertelsmann and PRI-1 signed an agreement with ViacomCBS and S&S in November 2020 to purchase S&S for $2.175 billion. The acquisition of S&S would cement PRH's position as the "number one" publisher in the United States, increasing its retail market share to almost three times that of its closest competitor.¹ Trial Tr. at 741:17-742:4 (Dohle).

In November 2021, the Antitrust Division of the United States Department of Justice ("the government") brought this action against PRH, S&S, and their parent companies ("the defendants"), seeking to block the merger of PRH and S&S under Section 7 of the Clayton Act. The government's case sounds in "monopsony," a market condition where a buyer with too much market power can lower prices or otherwise harm sellers. Essentially, [*6]  the government alleges that the merger will increase market concentration in the publishing industry, which will allow publishing companies to pay certain authors less money for the rights to publish their books.

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