I found a reference for this: https://www.kirkusreviews.com/features/unauthorized-lord-rings/
Interestingly, Humphrey Carter, in Tolkien’s official biography, noted that while Tolkien was displeased with the Ace editions, they at least sported covers that resembled their stories; by contrast, Tolkien was distressed at the cover art for the Ballantine editions, to which he noted: “What has it got to do with the story? Where is this place? Why emus? And what is the thing in the foreground with pink bulbs?”
Ace’s editions were a commercial success, selling over 100,000 copies, which angered Tolkien and his publishers. They complained, and as early as May 1965, Tolkien began to urge the fans who wrote to him to inform them that the American copies were pirated: "I am now inserting in every note of acknowledgement to readers in the U.S.A. a brief note informing them that Ace Books is a pirate, and asking them to inform others."
Competition to the Ace copies arrived at the same time, as Ballantine Books released their own ‘authorized’ The Fellowship of the Ring and The Two Towers in October and Return of the King in November of 1966. While Ace’s editions were priced at $0.75 against Ballantine’s $0.95, the tide began to turn as the negative publicity mounted.
It’s interesting to see that Tolkien utilized the fanbase that he so abhorred to fight back against the unauthorized editions. He was also correct: The incredible publicity that the row received, which pulled in efforts from the Science Fiction Writers of America, helped to grow the fervent readership for the tales from Middle Earth. It’s also ironic that while Tolkien had resisted so “ ‘degenerate a form’ as the paperback book,” it was in that format which they first appeared and grew in popularity within the United States.
Bookstores and fans began to boycott the unauthorized edition, and by February 1966, Tolkien reported in a letter that he had reached an agreement with Wollheim to receive some royalties from their publication run, and a promise that they would let the edition sell out, with no further print runs. Ace was under no legal obligation to agree to such a deal, but considerable pressure from their rival publishers and readers forced them to the table. By March, Ace announced that they had reached an agreement with the author, and their edition fell out of print.