The Competition and Markets Authority (CMA) has announced that it will commence an investigation into the $2 billion (£1.45 billion) takeover of book publisher Simon & Schuster by its competitor, Penguin Random House.
On 22 March 2021, the CMA stated that it will assess if the deal will result in ‘substantial lessening of competition within any market or markets in the United Kingdom for goods or services’.
In November 2020, news broke that German media conglomerate Bertelsmann, which owns Penguin Random House, was also acquiring Simon & Schuster from its parent company, ViacomCBS.
The takeover came less than a year after Bertelsmann had taken complete control of Penguin Random House. As Penguin Random House is already one of the largest publishing houses in the world, there are concerns over whether Bertelsmann’s subsequent takeover of Simon & Schuster will lead to reduced competition.
In the aftermath of the deal, Robert Thomson, chief executive of Rupert Murdoch’s News Corp, said the deal would consequently lead to an anti-competitive ‘behemoth of books’ that would retain control of a third of the US book market. However, Bertelsmann has stated that the merged entity would have a US market share of less than 20%.
A spokesperson for Penguin Random House has said that its imprints would still be able to compete with each other when bidding for books, but it is too early to determine whether Simon & Schuster and its imprints would count as a third party.
In the US, the Authors Guild and National Writers Union, in addition to four other writers’ groups and nonprofit organisation Open Markets Institute, wrote a letter to the Department of Justice in January to request a blocking of the takeover.
Bertelsmann originally owned Random House before acquiring Penguin from Pearson in 2013, forming Penguin Random House as a merger of the two publishers. Pearson then sold its remaining 25% stake in Penguin Random House to Bertelsmann in 2019.