An anti-trust investigation has been initiated by the U.S. Justice Department into $125 million settlement between Google and a group of authors and publishers.

In a letter to the New York District Court, the Justice Department said it has started an anti-trust probe into the proposed settlement between Google and representatives of publishers and authors.

The issue emerged in 2005, when the Authors Guild and the Association of American Publishers filed a lawsuit against Google. The authors and publishers objected to Google’s arrangement to digitize countless books from libraries in order to make them available in its “Book Search Service” would violate their copyrights.

In Oct. 2008, Google made a deal with the Authors Guild and the Association of American Publishers for $125 million, whereby Google would display and sell their works online and in return copyright owners would be compensated for the same.

Under the settlement, Google and the publishers will utilize $34.5 million to create a registry program to compensate copyright holders, and another $45 million will be used to pay authors whose works have been scanned without their permission.

Speaking on the issue, William Cavanaugh, U.S. Deputy Assistant Attorney General William Cavanaugh, said, “The U.S. has reviewed public comments expressing concern that aspects of the settlement agreement may violate the Sherman Act.”

On the other hand, Eric Schmidt, Google’s chief executive officer has claimed the decisions taken by Google were pro-consumer.