US Federal Judge Denise Cote has approved the Department of Justice (DoJ)'s controversial settlement with three major publishers - Hachette, HarperCollins, and Simon & Schuster - in a 45-page decision. The settlement requires the publishers to allow e-book retailers to sell their books at any price, even below cost, so long as the retailer does not lose money over a publisher's entire e-book list over a 12-month period.
DoJ had sued five publishers (the others are Penguin and Macmillan) and Apple this spring, alleging that they had colluded to introduce "agency pricing" for e-books in 2010 with the launch of the iPad.
The Authors Guild opposed approval of the settlement, believing that the DoJ could address the alleged collusion without requiring three publishers to allow Amazon to resume predatory pricing. It has been pointed out that Amazon's predatory pricing (which reportedly included selling bestselling frontlist e-book titles at a loss) may have helped the online retailer gain a 90% share of the e-book market by January 2010.
There is concern that the court's ruling will likely deal a serious blow to bookstores. According to the Authors Guild, selling goods at below cost is inherently anticompetitive and Amazon has made a practice of targeting the very titles that sell best in bookstores for its predatory pricing. Because of the number of titles affected by the settlement, and because it comes at a critical time for bookstores, the settlement may irreversibly reshape the literary marketplace, it is observed. Even so, as the court acknowledges, the DoJ didn't bother submitting a single economic study about the likely effects of the settlement on the market.
