Penguin-Random House deal backed by EU

The proposed merger of Penguin and Random House that will create the world’s largest book publisher has been given the green light by the EU’s competition watchdog.

The deal will bring classics like George Orwell’s 1984 and the recent literary phenomenon Fifty Shades of Grey by E.L. James under one umbrella. The merged publisher Penguin Random House is set to control about a quarter of the world’s consumer book market.

Still, the deal does “not raise competition concerns, in particular because the merged entity will continue to face several strong competitors,” the EU Commission said in a statement.

The decision follows a similar unconditional green light by US antitrust authorities in February. The Canadian Competition Bureau and other regulators are still reviewing the deal’s impact.

Random House’s German parent company, Bertelsmann SE, welcomed the EU’s decision in a statement, calling it “another important stage” toward completing the merger.

Bertelsmann will own 53% of the new company, which will encompass all of both companies’ publishing units in the US and six other countries.

Random House and Penguin, a division of Britain’s Pearson PLC media group, are two of the so-called “big six” publishers in the United States.

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.

Besides the US, 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% of the global consumer publishing market, leaping ahead of the 17% share of French publisher Lagardere, according to analyst estimates.

The two media companies had announced the merger last October and expect to finalise the deal in the second half of this year.

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