CMA to Probe Penguin’s $2.2 Billion Simon & Schuster Takeover

The UK’s competition Competition and Markets Authority has launched an investigation into the acquisition of Simon & Schuster by Penguin Random House owner Bertelsmann.

The $2.2 billion acquisition of Simon & Schuster was agreed last year after Bertelsmann outbid Rupert Murdoch’s News Corp, a move that Penguin hoped would strengthen its US presence. If completed, Simon & Schuster will continue to be managed as a separate publishing unit under Penguin Random House.

The merger is the second major deal by CEO Thomas Rabe since Bertelsmann took control of Penguin Random House from Pearson. Rabe said that the company entity formed by the Simon & Schuster merger would have a share of less than 20% in the US market, making the move “approvable”.

Concerns over the deal were raised by US writers’ groups including the Authors Guild, who called for the Department of Justice to block it. The Guild warned that the companies’ merger would bring “well more than half of key US book markets under the control of a single corporation,” potentially posing a threat to “freedom of speech and democracy in the United States”.

News Corp CEO Robert Thomson has also criticised the deal as operating on “anti-market logic” that would create “a book behemoth”.

Firms will be invited to comment on the CMA’s investigation up to 7 April, after which the body will make a phase one decision on 19 May.

“We have notified the acquisition of Simon and Schuster to the UK Competition and Markets Authority as is normal in such circumstances and we are working with the CMA in its review,” a Penguin Random House UK spokesperson said in a statement.

Penguin is the world’s biggest trade publishing group, with more than 15,000 new publications and more than 600 million books sold each year.