Antitrust Law Daily Wrap Up, ANTITRUST NEWS: European Commission Unconditionally Approves Combination of Publishers Penguin and Random House, (Apr 5, 2013)

By Jeffrey May, J.D.

The European Commission (EC) has approved the combination of Bertelsmann's Random House publishing unit and Pearson's Penguin unit after concluding that the transaction would not raise competition concerns. The EC announced today that it had determined that the merged entity would continue to face several strong competitors. The EC's approval follows clearance by the U.S. Department of Justice Antitrust Division in February.

In October 2012, Bertelsmann and Pearson announced that they would combine their respective trade-book publishing companies, Random House and Penguin Group. Under the proposal, Bertelsmann was to own 53 percent and Pearson was to own 47 percent. According to the parties, the new publishing group will include all the publishing divisions and imprints of Random House and Penguin in the United States, Canada, the United Kingdom, Australia, New Zealand, India, and South Africa, as well as Penguin's publishing company in China, and Random House's Spanish-language publishing operations in Spain and Latin America.

The EC found that the merged entity will continue to face competition from several large and numerous small and medium sized publishers in the upstream markets for the acquisition of authors' rights for English language books in Europe and worldwide, and in the downstream markets for the sale of English language books to dealers in Europe, particularly in the United Kingdom and Ireland.

With respect to the sale of English language books, the merged entity will face a concentrated retail base, such as supermarkets for print books and large online retailers for e-books, like Amazon. The EC's investigation revealed no evidence that the transaction would lead to risks of coordination among publishers in relation to the acquisition of authors' rights and the sale of English language books to dealers. The EC also was satisfied that the transaction would not negatively impact third party book distribution, where both Random House and Penguin are active, or the book production market.

News: Antitrust