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Barnes & Noble Opposes U.S., Publishers E-Book Settlement

Barnes & Noble Inc., the largest U.S. bookstore chain, objected to the proposed U.S. antitrust settlement with electronic-book publishers, saying the government made a mistake that will favor Inc.’s industry dominance.

The book retailer said the proposal would injure bookstores and writers, according to a federal court filing provided today by New York-based Barnes & Noble. The document, filed under a provision that allows public comment on antitrust settlements, couldn’t immediately be confirmed with court records.

The U.S. sued Apple Inc. and five publishers April 11, claiming they colluded to fix prices for e-books. CBS Corp.’s Simon & Schuster, Lagardere SCA’s Hachette Book Group and News Corp.’s HarperCollins settled their suits, while Apple Inc., Pearson Plc’s Penguin and Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, vowed to fight the lawsuit.

“We think the Justice Department has made a gross error and gotten this wrong,” Gene De Felice, Barnes & Noble’s general counsel, said in a telephone interview. “Their attack on publishers, small business and free commercial relationships is really unprecedented.”

Before the pricing agreements, Seattle-based Amazon had dominated the digital books market by offering titles at $9.99 each. Through the agreements, the publishers set prices for best-selling books at $12.99 and $14.99, giving Apple a 30 percent cut.

Cancel Contracts

Under the settlements, the three publishers agreed to cancel contracts with Amazon, Google Inc. and other electronic booksellers that allowed publishers to set prices. That pricing practice, known as the so-called agency model, replaced a wholesale model under which Amazon bought e-books and set its own prices.

The Justice Department appears “to be supporting a monopoly by Amazon,” De Felice said. “Free expression will be controlled by Amazon from a server in Washington.”

U.S. antitrust officials have stepped up enforcement against anticompetitive price-fixing agreements in industries including health care and auto parts.

Regulators have also increased scrutiny of Cupertino, California-based Apple’s digital publishing, mobile computing and music retail businesses to make sure the iPad-maker hasn’t thwarted competition on its way to becoming the world’s most valuable company.

The case is U.S. v. Apple, 12-cv-2826, U.S. District Court, Southern District of New York (Manhattan).

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