The US government has sued Apple and five other publishers, saying they conspired to fix the prices of ebooks.

It reached a settlement with three of the publishers that could lead to cheaper ebooks for consumers.

The Justice Department accused Apple of colluding with the five publishers as it was launching the iPad in early 2010.

Because of the agreement, ebook prices went up an average of $2 to $3 in a three-day period in early 2010, according to the Justice Department lawsuit filed in New York yesterday.

The settlement reached with three of the publishers will allow Amazon to resume discounting books, and will terminate the "most favoured nation" contracts with Apple.

Amazon said in response to the settlement that it plans to lower prices on books associated with its Kindle reader.

The pact also requires the publishers to wait two years before entering into any "agency model" agreements that prevent retailers from offering discounts on electronic books.

The publishers who agreed to settle are News Corp’s HarperCollins Publishers Inc, CBS Corp's Simon & Schuster Inc and Lagardere SCA's Hachette Book Group.

Hachette and HarperCollins also settled with a group of US states, agreeing to pay $51m in restitution to consumers who bought ebooks.

Publishers Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, and Pearson Plc's Penguin Group, plan to fight the Justice Department charges, along with Apple.

Booming market

The ebook market has boomed in recent years. Sales grew from $78m in sales in 2008 to $1.7bn in 2011, according to Albert Greco, a book-industry expert at the business school of Fordham University.

A Pew Research Center survey released last week found that one in five US adults read an ebook in the past year.

US Attorney General Eric Holder told a news conference in Washington that executives at the highest levels of Apple and the publishers worked together to eliminate competition among sellers of ebooks.

During December 2009 and January 2010, the publisher defendants' US chief executives placed at least 56 phone calls to one another, the complaint alleges.

"As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles," Mr Holder said.

Apple had no comment about the federal lawsuit.

In a recent court filing, in a private class action suit on the same issue, Apple said it had not colluded with the publishers but "individually negotiated separate vertical agreements with each of the publishers."

Macmillan Chief Executive John Sargent released a defiant letter to the book industry yesterday saying the publisher did not collude.

Mr Sargent said Macmillan had been in discussions with the Justice Department for months, but the settlement terms were "too onerous".

"After careful consideration, we came to the conclusion that the terms could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model," Mr Sargent said.

Hachette said in a statement that it reluctantly agreed to join the federal and state settlements, but it "was not involved in a conspiracy to illegally fix the price of ebooks."

Penguin CEO John Makinson said his company did nothing wrong and was alone among the publishers in not holding any settlement discussions.

HarperCollins, which also settled, denied any wrongdoing. Simon & Schuster declined to comment.

The US government alleged that Apple and the publishers had a common interest in fighting Amazon's practice of selling e-books for as little as $9.99 as it was building market share and trying to drive sales of its Kindle reader.

Apple's late co-founder Steve Jobs figures prominently in the Justice Department's lawsuit with many instances of his personal involvement in negotiations with publishing executives about deal terms.