In targeting ViacomCBS’ $2 billion-plus sale of Simon & Schuster to Penguin Random House, the DOJ is looking at monopolies through a labor lens — and could do so on other M&A.
Antitrust regulators under the Biden administration are signaling that they’re looking beyond consumer welfare and taking into consideration labor exploitation, acquisition history and even supply chain resiliency when investigating potentially anticompetitive behavior.
“There’s more risk for companies across the board, because the areas that the government says they’ll look into and the basis the government says they’ll challenge deals [on] have expanded,” says Benjamin Sirota, a former prosecutor at the Justice Department’s antitrust division. The DOJ suit to block the Penguin Random House/Simon & Schuster deal rests on how the merger will impact negotiations between authors and publishers. Authors mostly get paid through advances. In a healthy, competitive market with a robust supply of editors across several publishing houses, authors can generate higher offers by having publishers bid against one another. But mergers mean layoffs, and layoffs mean there will be fewer editors to whom authors can sell.
The defendant publishers take issue with the rarefied nature of the government bringing a monopsony case. They argue that antitrust laws are meant to protect consumers — not the highest-paid authors raking in upward of six figures in book deals. “Notably, the Department of Justice does not allege that the merger will reduce competition in the market for book sales or raise prices for consumers,” their attorneys write in a motion responding to prosecutors’ allegations.
The government, however, was unconvinced by the offer. Part of the reason is a pivot from the government on how it will approach antitrust enforcement under the Biden administration. In January, Jonathan Kanter, assistant attorney general for antitrust, said that regulators will move to block mergers they find to violate antitrust laws instead of seeking complex settlements that “suffer from significant deficiencies” and “too often miss the mark.
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