Justice warns Apple, 5 others over e-books

The U.S. Justice Department has warned Apple and five major U.S. publishers that it plans to sue them, accusing them of colluding to raise the prices of electronic books, a person familiar with the probe said Thursday.

Several parties have held talks to settle the potential antitrust case, said the person, who was not authorized to speak publicly on the matter. It is not yet clear what such a settlement might look like.

The five publishers facing possible Justice Department action are Simon & Schuster Inc, a unit of CBS Corp.; Lagardere SCA's Hachette Book Group; Pearson Plc's Penguin Group (USA); Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH; and HarperCollins Publishers Inc., a unit of News Corp.

U.S. and European officials have been investigating whether publishers and Apple acted together to drive up prices in the booming electronic book industry, blocking rivals such as Amazon from offering cheaper e-books.

Antitrust rules forbid price-fixing agreements designed to shut out competitors or drive up what consumers pay.

E-book publishers adopted an "agency model" in 2010, around the time that Apple launched the iPad.

That model allowed publishers to set the price of e-books and in turn, Apple would take a 30 percent cut. The Apple agreements with publishers effectively barred them from allowing rival retailers to sell the same books at lower prices.

Amazon, which got a head start in the e-book market with its Kindle e-reader, generally charged $9.99 for its e-books.

The Wall Street Journal earlier reported the Justice Department's lawsuit warning to Apple and the publishers.