The agency model is a pricing model whereby book publishers set the price of the e-books, and distributors, like Amazon or Apple, get a fee from the publishers on every book sold. Distributors allegedly do not own the e-books and therefore do not have the right to set prices.
On April 11, 2012, the U.S. Department of Justice (DOJ) filed a lawsuit against Apple and five of the Big Six publishing houses in the United States. The suit alleges that Apple and the named publishers colluded to artificially increase the price of e-books by letting publishers set the prices. In early September 2012, a federal judge has approved the U.S. Justice Department's settlement with three of electronic book publishers (Hachette, HarperCollins and Simon & Schuster). Under the settlement they agreed to abandon the agency model.
A number of State Attorney Generals filed similar suits. Those were settled under similar terms. The three publishers agreed to pay $69 million as part of the settlement.
Similar lawsuits were filed in Europe under EU competition laws.