US may move to block ITA’s sale to Google

Deal could face antitrust lawsuit

By Sara Forden and Jeff Bliss
Bloomberg News / January 14, 2011

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WASHINGTON — The Justice Department is preparing for a possible antitrust lawsuit to stop Google’s $700 million acquisition of ITA Software, according to people familiar with the matter.

Department officials haven’t made a final decision about whether to sue to block the purchase by Google, owner of the world’s most popular search engine, said the people, who requested anonymity because the agency discussions are confidential. Google announced in July its plans to acquire ITA, a Cambridge, Mass., provider of online airline flight and ticket information. The next month, government lawyers said they were extending their ITA investigation.

Google triggered preparation for the government’s possible lawsuit last month by invoking a provision of federal law that forces the government to decide within 30 days whether to challenge the deal, the people said. In bringing the matter to a head, they said, Google prompted Justice Department lawyers to cancel Christmas holiday plans and put together a case.

“It could be Google did that because things are not moving forward,’’ said Andrew Gavil, a law professor at Howard University in Washington. “As a business matter, it can be very difficult’’ to manage an acquisition if there is a probe.

Gavil, who said he has no direct knowledge of the progress of the investigation, received funding from Google for research unrelated to the ITA acquisition.

A group of software and online travel companies including Microsoft, Expedia, and Travelocity have been leading the opposition to the acquisition. They helped form to highlight concerns that Google would prevent others from using ITA’s technology.

Adam Kovacevich, a Google spokesman, declined to comment on the deadline or the department’s preparation.

“While we continue to cooperate with the Justice Department’s review, we are ultimately confident that this acquisition will increase competition,’’ he e-mailed.

The Justice Department declined to comment because the matter is pending.

“I believe the Google-ITA deal is uncompetitive and should be challenged,’’ said Pamela Jones Harbour, a former member of the Federal Trade Commission who dissented in 2007 from its decision to let Google buy DoubleClick, an online advertising company. “It’s a dominant firm expanding in an adjacent market by acquiring ITA, and the effect would be to dominate flight search.’’

Google has said it will continue to license the ITA software to third parties after the acquisition is complete.

Online travel agencies and Orbitz have been supportive of the deal, which Google said would allow it to display flight times and prices in search results.