Judge blocks Penguin Random House from merging with Simon & Schuster

A federal judge has blocked the $2.18 billion merger between two book-publishing giants — Penguin Random House and rival Paramount Simon & Schuster — saying the mega-deal would unlawfully reduce competition.

On Monday, US District Judge Florence Pan blocked the merger between Bertelsmann’s Penguin Random House, publisher of books like Michelle Obama’s “Becoming,” George Orwell’s “1984” and Dan Brown’s “The Da Vinci Code,” with Paramount Global’s Simon & Schuster, home to bestsellers like Stephen King’s “Fairy Tale,” John Irving’s “The Last Chairlift” and “State of Terror” by Hillary Clinton and Louise Penny.

While Pan’s ruling remains under seal, the judge said in a statement: “The Court finds that the United States has shown that the effect of the proposed merger may be substantially to lessen competition in the market for the U.S. publishing rights to anticipated top-selling books.”

Bertelsmann vowed to appeal the ruling on Tuesday.

“We do not share the court’s assessment any more than we previously shared the Department of Justice’s position,” Bertelsmann chief executive Thomas Rabe said in a statement. “A merger would be good for competition.”

Paramount Global said it was “disappointed by the ruling” and said it is in talks with Bertelsmann and Penguin Random House over next steps, including an expedited appeal.

The decision comes a year after the US Justice Department filed a lawsuit aimed at stopping the merger between the fourth- and fifth-largest publishers. The government claimed the deal would give “outsized influence over who and what is published, and how much authors are paid for their work.”

The DOJ did not immediately respond to calls for comment on Bertelsmann’s appeal.

Following Monday’s ruling, Assistant Attorney General Jonathan Kanter of the DOJ’s Antitrust Division praised the decision, saying it “protects vital competition for books and is a victory for authors, readers, and the free exchange of ideas.”

He added: “The proposed merger would have reduced competition, decreased author compensation, diminished the breadth, depth, and diversity of our stories and ideas, and ultimately impoverished our democracy.”

The high-profile case included a 13-day trial that ended in August and featured testimony from the novelist Stephen King for the government.

The government claimed that the deal would have decreased competition in the market for rights to best-selling books, lowering writers’ pay and reducing consumers’ choices. The publishers shot back, contending that the deal would have let them compete with digital behemoths Amazon and Disney.

Penguin Random House did not immediately repsond to The Post’s request for comment.

Penguin Random House, one of a group of large publishers known as the “Big Five,” is the world’s biggest English-language trade publisher. It had announced plans to merge with Simon & Schuster, the fourth-largest book publisher in the US, in 2020.