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Justice Department Sues Apple Over e-Books

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Justice Department Sues Apple Over e-Books

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A woman reads on her Apple iPad. The Cupertino-based technology company is reportedly preparing to be sued by the U.S. Justice Department as early as Thursday.

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The U.S. Justice Department filed a suit against Apple and several partnering publishers over how they priced e-books on Apple's popular mobile devices.

The suit filed in a New York district court alleges that "Apple facilitated the publisher defendants' collective effort to end retail price competition by coordinating their transition to an agency model across all retailers," according to the complaint.

In December the Justice Department first said it was investigating Apple over a possible e-book price-fixing scheme. A similar probe is also being conducted in Europe.

Wednesday sources close to the investigation told Business Week that the Justice Department was preparing to sue the Cupertino-based technology company and several book publishers over allegations that the two colluded to drive the price of e-books up but at the same time it was leaving the door open for a last minute settlement.

Until now Apple has been unwilling to settle with the government over any wrongdoing allegations. But four partnering publishers are reportedly interested in reaching a settlement.

Apple was instead prepared to argue that its e-books price agreements with publishers actually increased competition in a market dominated by rival Amazon, according to the sources.

Simon & Schuster, Lagardre SCA's Hachette Book Group and News Corp.'s HarperCollins were all looking to settle the suit, according to CNet.

A similar suit was filed last year by consumers who alleged they paid higher prices for e-books because of the pricing model that Apple and its publishing partners employed.

The average cost of an e-book on an Apple device right now costs between $9.99 and $12.99.

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