January 14, 2011 12:28 am

US regulators question Google’s deal to buy ITA

The US government has stepped up its investigation into Google’s proposed acquisition of travel search company ITA, potentially putting the search company on a collision course with regulators over a deal that would make it a key player in the online travel business.

The Department of Justice has accelerated its requests for information from others affected by the transaction, giving it the information that would enable it to mount a case to block the deal if it decided to go that route, according to two people familiar with the process.

“They’ve started the process to litigate if they want to, but a lot of this could be high-stakes brinkmanship,” said one person close to the situation.

The proposed $700m acquisition of ITA would bring Google control of a company whose software is used by many airlines to maximise yields from seat sales and by travel agents to book flights.

Its customers include some of the biggest players in the online travel industry.

Google’s attempt to muscle into the field has raised concerns both that it might harm other companies that rely on ITA software, and that it would be in a position to direct users of the Google search engine direct to flights, cutting out other online services.

“ITA occupies a unique position in the flight search business, it’s far and away the leading technology,” said Tom Barnett, a former head of the DoJ’s antitrust division who is advising Expedia, one of the strongest critics of the deal. An outright purchase of ITA by Google “would give it control of the industry”, he added.

“While we continue to co-operate with the justice department’s review, we are ultimately confident that this acquisition will increase competition,” Google said in a statement.

US antitrust regulators stepped up their investigation into the deal over the holiday period, the people familiar with the process said.

However, such a move does not show that the DoJ’s staff will definitely challenge the transaction.

Google faced similar close scrutiny of its acquisition of mobile advertising company Admob last year, with the Federal Trade Commission going as far as to build a case against the deal before eventually clearing it.

An alliance of online companies, including Expedia, Travelocity and Microsoft, have joined forces to lobby against the ITA deal.

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