The Justice Department has formally decided to sue Apple, Hachette, HarperCollins, Macmillian, Penguin and Simon & Schuster over alleged e-book price-rigging. Apple and Macmillian have already denied any wrongdoing, saying that the agreements were enhancing competition in an industry previously dominated by Amazon. The case centers around a deal to switch to agency pricing, where the vendor takes a 30 percent cut of each sale rather than the wholesale model which allows stores to sell books at rock-bottom prices. It was previously believed that the publishers had cut back-room deals with the Government agency after bowing to pressure to withdraw Cupertino's "favored nation" status. If successful, the DoJ will allow Amazon and Barnes and Noble amongst others to return to the wholesale model to sell best-sellers at a loss, something that the big five are desperate to avoid, and will look to fight the battle in court.

Update: The PDF of the DoJ's filing is now available online -- it makes for fascinating reading.

Update 2: Bloomberg is now reporting that Simon & Schuster, Lagardère SCA's Hachette Book Group and HarperCollins have settled with the DoJ over unspecified terms. Hasty!