US gov't to not take action against Random House, Penguin merger

Media company Pearson seeks to merge its Penguin Books division with Random House, which is owned by German media company Bertelsmann. The proposed publishing house would have around a quarter of the consumer book market.

Penguin and Random are two of the so-called “big six” publishers in the United States. Their merger will bring together such Random House authors as E L James and John Grisham and such Penguin writers as Patricia Cornwell and Elizabeth Gilbert.

The merger is widely seen as an effort to counteract the power of Amazon.com, which has worried publishers by aggressively cutting prices on e-books. Deals struck with Apple in 2010 that gave publishers more control over e-book costs led to a Justice Department antitrust lawsuit in the spring of 2012. Penguin, one of the five publishers sued, has settled since the merger was announced last fall.

Word of the U.S. government's decision on the merger came from the companies, and Justice Department spokeswoman Gina Talamona confirmed it on Thursday.

Bertelsmann will own 53 percent and Pearson 47 percent of shares in the proposed publishing house, which will encompass all of Random House and Penguin Group's publishing units in the U.S. and six other countries.

Among other regulators reviewing the proposed arrangement are the Canadian Competition Bureau and the European Commission. Bertelsmann and Pearson said they expect all antitrust approvals needed to finalize the merger will be completed in the second half of this year.

“This positive first decision by one of the antitrust authorities is an important milestone on the path to uniting two of the world's leading publishing companies into a truly global publishing group,” Bertelsmann Chairman and CEO Thomas Rabe said.

Besides the U.S., the proposed merger includes Random House and Penguin Group's publishing units in Canada, the United Kingdom, Australia, New Zealand, India and South Africa. Penguin's operations in China and Random House's publishers in Spain and Latin America also are part of the proposed merger.

The combined company will control 26 percent of the global consumer publishing market, leaping ahead of the 17 percent share of French publisher Lagardere, according to research by Espirito Santo Bank.

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