January 14, 2011, 2:18 PM — The U.S. Department of Justice is considering an antitrust lawsuit against online search giant Google over its proposed $700 million acquisition of travel-software company ITA Software.
While no decision reportedly has been made about whether to go forward with the action, a recent legal maneuver by Google has imposed a tight deadline on the Justice Department to determine if it will pursue the case.
And what a maneuver it was. Here's how Bloomberg explains it:
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.
Talk about winning over the hearts and minds of antitrust regulators! Granted, they're professionals and are expected to look at the facts objectively. And they probably will.
But they're also human, and that just strikes me as a jerk move on Google's part. I know Google's hot-to-trot to wrap up the deal it first announced last July. Still, wouldn't it have been politically wiser to hold off on invoking the provision until, you know, after the holidays?
Two things to consider:
1) For all of Google's seeming impatience, it's the Justice Department's job to review these kinds of deals. Google said last summer that it is "working cooperatively" with the department. Which sounds all nice and helpful, but as John Simpson of Consumer Watchdog pointed out last August, "under the law, they’ve got no choice about that."
2) Despite the implication of one analyst quoted by Bloomberg that this is yet another example of a sideshow ruckus involving antitrust questions about a Google acquisition that inevitably will be followed by an approval, the ITA Software deal may be different.
As Consumer Watchdog's Simpson wrote last August, the "second request" by DoJ for information from Google regarding its proposed acquisition hardly is a "routine part of the process." Simpson cited a DoJ briefing about merger policy:
"Most HSR premerger notifications do not lead to an antitrust investigation. For example, 2,979 of the 3,655 transactions reported during the fiscal years 2002-2005 proceeded without either the FTC or the Division opening an investigation, meaning that 81 percent of the time no information was sought from the parties beyond that which was included in their initial HSR filings…
“The Division does not issue second requests lightly. During the years 2000-2005, for example, the Division issued second requests in 180 of its 555 preliminary investigations, or 32 percent of its investigations. Approximately 97 percent of HSR reported transactions were able to proceed with no second request.”
So they're not fooling around here. Further, for all of Google's lobbying firepower in Washington, the coalition of software and online travel companies opposing the ITA deal -- FairSearch.org, which includes Microsoft, Expedia, Travelocity, Hotwire and tripadvisor -- also has plenty of troops on the ground on Capitol Hill. Its argument that the ITA deal will hurt competition in the online travel business obviously is being heard by antitrust investigators.
While the 30-day decision deadline triggered by Google may seem hard and fast, federal law allows for extensions to be negotiated. Faced with the prospect of a lawsuit or dragging out the process even further, I'm guessing Google would opt for the latter. But it may not have a choice.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.