By Jia Lynn Yang
Washington Post Staff Writer
Thursday, January 13, 2011; 11:27 PM
Federal antitrust officials are readying a potential court case to block Google's controversial merger with a firm that powers most online flight ticket sales, according to a person with knowledge of the matter.
The Justice Department has not yet decided whether to block the $700 million deal. Its attorneys are laying the groundwork for a trip to court in case Google pulls the trigger on closing the deal, which could happen imminently, forcing the government to react quickly, this person said.
Google's planned merger with ITA Software has become the latest test for how antitrust enforcers should handle the tech giant as it extends its influence far beyond Web search into mobile phones, electronic book sales and - if the ITA deal goes through - the online travel industry.
Since the acquisition was announced in July, the Justice Department has been examining whether the deal will give Google too much power in the online travel search market. Rather than greenlight the deal immediately, Justice requested in August that Google hand over more information.
According to the law, once a company is done cooperating with officials, the government has 30 days to make a final decision on whether to allow the deal. Otherwise, the company can move forward with closing the merger.
Google recently told Justice that it is done complying with the agency's requests, potentially setting in motion the 30-day deadline, according to the person familiar with the matter who spoke on the condition of anonymity in order to speak more freely about the confidential matter. Justice and Google can continue to negotiate over whether the company has in fact fully complied, making the 30-day deadline less clear-cut.
The deal between ITA and Google could have far-reaching consequences for consumers.
Despite ITA's obscurity, the company's technology revolutionized travel by allowing consumers to compare airline ticket prices online. Sites such as Orbitz, Kayak and Microsoft's Bing all use ITA's technology to power their travel search engines.
Google's competitors worry that if the search behemoth acquires ITA, it will muscle others out of the travel search business by displaying Google's own flight ticket search results more prominently.
Google counters that a partnership with ITA will allow the company to build a smarter, better flight search engine that will only benefit travelers.
"While we continue to cooperate with the Justice Department's review, we are ultimately confident that this acquisition will increase competition," Google spokesman Adam Kovacevich said in a statement Thursday. He declined to comment on any communication between the company and antitrust enforcers.
A Justice spokesman said the department had no comment on the merger review.
While Justice is expected to make a decision within several weeks, any legal challenge to the deal is likely to face an uphill battle in the courts. Judges have been reluctant to block mergers between companies that do not compete head to head, and Google and ITA are not direct competitors, antitrust experts have said.
Even if antitrust officials lay out a potential legal challenge, attorneys could decide against going to court and instead approve the deal while adding some restrictions on Google's behavior.