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U.S. may sue to block Google-ITA deal, sources say

Justice Department lawyers are determining whether to try to stop the acquisition of the flight information software provider on antitrust grounds, people familiar with the matter say.

January 13, 2011|Bloomberg News

The U.S. Justice Department is considering an antitrust lawsuit to stop Google Inc.'s $700-million acquisition of ITA Software Inc., according to people familiar with the situation.

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, which provides online airline flight and ticket information software. 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.

A group of software and online travel companies including Microsoft Corp., Expedia Inc. and Sabre Holdings Corp.'s Travelocity have been leading opposition to the acquisition. They helped form FairSearch.org 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 said.

The Justice Department declined to comment.

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

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

The threat of a government lawsuit has thwarted Mountain View, Calif.-based Google's expansion plans before. The company in 2008 abandoned its agreement to place ads on Yahoo Inc.'s site after the department threatened to challenge the venture in court.

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