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Originally published Thursday, September 6, 2012 at 8:26 PM

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Judge approves e-book case in Amazon's favor

the ruling by Denise Cote, the federal district judge in Manhattan overseeing the case, promised to empower Amazon, the e-retailing giant, to drop the price of many e-books back to $9.99 or lower, a move that could pressure competing retailers to do the same.

The New York Times

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In a decision that could start an e-book price war, a federal judge Thursday approved a settlement between the Justice Department and three major publishers in a civil antitrust case that accused the companies of collusion in the pricing of digital books.

The long-expected approval soundly rejected criticisms of the deal that had accumulated throughout the summer from hundreds of parties, including Barnes & Noble, the Authors Guild and the American Booksellers Association.

And the ruling by Denise Cote, the federal district judge in Manhattan overseeing the case, promised to empower Amazon, the e-retailing giant, to drop the price of many e-books back to $9.99 or lower, a move that could pressure competing retailers to do the same.

Publishers and authors predicted that in the long run, the settlement could allow the e-book marketplace to return to its state several years ago, when Amazon had close to 90 percent of the market and other retailers struggled to get a foothold.

"I think that everybody competing with Amazon in the e-book market had better fasten their seat belts," said Mike Shatzkin, chief executive of Idea Logical, a consultant to publishers. "I would expect Amazon to be leading the charge to cut prices on the most high-profile e-books as soon as the decision allows them to do so. As soon as that starts to happen, all the books that are competing with them will have to reconsider their prices."

Gina Talamona, a Justice Department spokeswoman, praised the ruling, saying "consumers will start to benefit from the restored competition in this important industry."

Amazon declined to comment Thursday. But when the settlement was announced in April, Amazon called it "a big win for Kindle owners" and said it looked forward to eventually lowering its prices on e-books.

Paul Aiken, the executive director of the Authors Guild, which vigorously opposed the settlement, said the biggest losers would be traditional independent bookstores. If the cost of a newly released e-book drops further, the bookstores will have more trouble selling hardcover books at their current prices, he said.

"It is an incredible, bizarre decision," Aiken said.

He said that if Amazon resumes its price cutting, as expected, it would have the benefit of a much bigger list of e-books than what was available several years ago.

"They can use those books to target traditional bookstores," he said.

In her opinion, Cote said the Justice Department had claimed a "straightforward, horizontal price-fixing conspiracy." She rejected arguments against the settlement, saying they were "insufficient" to deny its approval, and dismissed requests to hold an evidentiary hearing as an unnecessary delay.

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