[Federal Register Volume 76, Number 72 (Thursday, April 14, 2011)]
[Notices]
[Pages 21017-21033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-9020]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Google Inc. and ITA Software Inc., Proposed
Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v. Google Inc. and ITA Software Inc., Civil Case No.
1:11-cv-00688. On April 8, 2011, the United States filed a Complaint
alleging that Google's proposed acquisition of ITA Software Inc. would
substantially reduce competition in the online travel planning
industry, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
The proposed Final Judgment would require Google to continue licensing
ITA Software's products for a period of five years following the
merger.
Copies of the Complaint, proposed Final Judgment and Competitive
Impact Statement are available for inspection at the Department of
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-
2481), on the Department of Justice's Web site at http://www.justice.gov/atr, and at the Office of the Clerk of the United
States District Court for the District of Columbia. Copies of these
materials may be obtained from the Antitrust Division upon request and
payment of the copying fee set by Department of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to James J. Tierney, Chief, Networks and Technology Section, Antitrust
Division, U.S. Department of Justice, 450 Fifth Street, NW., Suite
7100, Washington, DC 20530 (telephone: 202-307-6200).
Patricia A. Brink,
Director of Civil Enforcement.
In the United States District Court for the District of Columbia
United States of America, United States Department of Justice,
Antitrust Division, 450 Fifth Street, NW., Suite 7100, Washington,
DC 20530, Plaintiff, v. Google Inc., 1600 Amphitheatre Parkway,
Mountain View, CA 94043, and ITA Software, Inc., 141 Portland
Street, Cambridge, MA 02139, Defendants.
Civil Action No. 1:11-cv-00688.
Filed: 4/8/2011.
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil action against
Google Inc. (``Google'') and ITA Software, Inc. (``ITA'') pursuant to
the antitrust laws of the United States to enjoin Google's proposed
acquisition of ITA, and to obtain such other equitable relief as the
Court deems appropriate. The United States alleges as follows:
I. Nature of Action
1. On July 1, 2010, Google, a significant provider of general
Internet search and search advertising in the United States, entered
into a merger agreement to acquire ITA, the provider of the leading
independent airfare pricing and shopping system (``P&S system''), for
$700 million. P&S systems provide flight pricing, schedule and seat
availability information to Internet travel sites.
2. Online travel represents a significant share of e-commerce in
the United States. Consumers rely on the Internet to make their travel
plans, and often begin by shopping for airfare. Online travel
intermediaries (``OTIs'') such as Orbitz, Kayak and Expedia allow
consumers to compare flight prices, schedules, and seat availability on
multiple airlines simultaneously. OTIs, and the flight search services
they offer, have become very popular with consumers who want to ensure
they are getting the best deal. Indeed, most U.S. consumers compare
flight options on an OTI Web site before purchasing a ticket online.
3. ITA's P&S system, QPX, powers a significant share of the
domestic comparative flight searches conducted by U.S. consumers. ITA
licenses QPX to many of the most popular and innovative OTI's providing
comparative flight search services, including Orbitz, Kayak, and
Microsoft's Bing Travel. QPX is a critical flight search tool for many
of its licensees, as other P&S systems cannot match its speed and
flexibility, and are not poised to do so in the near future. Thus,
these OTIs currently have no adequate alternatives to QPX and will not
have any following the merger.
4. Google has the most widely used general Internet search engine
in the United States and is the leading seller of Internet search
advertising. Google seeks to expand its search services by launching an
Internet travel site to offer comparative flight search services.
5. The proposed merger will give Google the means and incentive to
use its ownership of QPX to foreclose or disadvantage its prospective
flight search rivals by degrading their access to QPX, or denying them
access to QPX altogether. As a result, the proposed merger is likely to
result in reduced quality, variety, and innovation for consumers of
comparative flight search services.
II. Jurisdiction, Venue and Commerce
6. The United States brings this action under Section 15 of the
Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain Google
and ITA from violating Section 7 of the Clayton Act, as amended, 15
U.S.C. 18.
7. Google is a corporation organized and existing under the laws of
the State of Delaware, with its principal place of business located in
Mountain View, CA. In 2009, Google earned more than $23 billion in
revenues in the United States. Google is engaged in interstate commerce
and in activities substantially affecting interstate commerce. It sells
online search advertising throughout the United States. Its sales of
online search advertising in the United States represent a regular,
continuous and substantial flow of interstate commerce, and have had a
substantial effect upon interstate commerce.
8. ITA is a corporation organized and existing under the laws of
the State of Delaware, with its principal place of business located in
Cambridge, MA. ITA is engaged in interstate commerce and in activities
substantially affecting interstate commerce. It makes sales throughout
the United States. Its sales in the United States represent a regular,
continuous and substantial flow of interstate commerce, and have had a
substantial effect upon interstate commerce.
9. The Court has subject-matter jurisdiction over this action and
these defendants pursuant to Section 15 of the Clayton Act, as amended,
15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345.
10. Venue is proper in this District under Section 12 of the
Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391(b)(1) and
[[Page 21018]]
(c). Defendants Google and ITA transact business and are found within
the District of Columbia. Google and ITA have submitted to personal
jurisdiction in this District.
III. The Merger Is Likely To Lessen Competition Substantially in the
Market for Comparative Flight Search Services in the United States
A. Overview of Comparative Flight Search Services and P&S Systems
11. Major airlines developed the first flight search systems in the
1950s and 1960s for their own internal use. In the 1970s, the airlines
started releasing specialized versions of these systems for use by
professional ``brick and mortar'' travel agents. These systems provided
both flight search and booking functionality. They were known first as
``computer reservation systems'' (``CRSs''), and later as ``global
distribution systems'' (``GDSs'') as airlines divested their ownership
interests and the companies expanded their presence outside of the
United States. The GDS firms function as intermediaries between the
airlines looking to sell tickets and travel agents with customers
looking to buy tickets.
12. The early flight search systems were relatively limited in
their search capabilities. They generated a limited set of results per
query, and did not present the list of flight options in a user-
friendly format. Travel agents received special training in order to
use the systems, and brought their training and experience to bear both
in performing flight queries and interpreting the results for
consumers. Consumers made travel decisions based on information
extracted from these systems by professional travel agents.
13. With the advent of the Internet, two different types of OTIs
emerged that allow U.S. consumers to search for domestic flight prices,
schedules, and seat availability on multiple airlines simultaneously:
Online travel agencies (``OTAs'') such as Expedia, Travelocity and
Priceline, and travel meta-search engines (``Metas'') such as Kayak,
TripAdvisor and Bing Travel. Like the ``brick and mortar'' travel
agencies, OTAs provide both flight search and booking services. Also
like the ``brick and mortar'' travel agencies, OTAs split booking fees
with the GDSs. They supplement this revenue by selling advertising on
their Web sites to airlines, hotels and other companies offering
travel-related products and services.
14. Metas enable consumers to search for flights but do not offer
booking services. When a consumer on a Meta travel site enters a flight
query, the Meta provides a set of flight options, and for each option,
a set of links to various airline and OTA Web sites. To purchase a
ticket, the consumer must click a link to an airline or OTA Web site.
In contrast to OTAs, which generate revenue primarily through booking
fees and secondarily through advertising sales, Metas generate revenue
through advertising sales and referral fees collected from the airlines
and OTAs.
15. To attract traffic, Metas generally offer innovative flight
search features that capture the consumer's attention, and provide an
array of attractive flight options in response to each query. Metas
also prioritize quick response times because consumers on their sites
are often at an earlier stage of the travel planning process, and are
less likely to endure a prolonged wait for search results. Although
Metas are the newcomers, they are driving competition in comparative
flight search services through innovation, and are progressively
gaining ground.
16. To perform a flight search on an OTA or a Meta, a consumer
typically enters an origin and destination city and desired travel
dates and times. The travel site then provides a number of options on
different airlines with varying routes and pricing. Some travel sites--
particularly the Metas--also offer more sophisticated and innovative
flight search features, for example, a fare predictor that allows
consumers to identify the best time to buy a ticket for a particular
trip, or an ``anywhere'' feature that allows them to explore different
destinations by specifying a price range, desired activity (e.g.,
beach, golf, skiing) and desired temperature (e.g., average high of
80).
17. To provide flight search functionality, OTAs and Metas rely on
P&S systems such as ITA's QPX. A system includes not only the P&S
engine software, but also on-going access to seat and fare class
availability data. When a consumer on a Meta or OTA Web site submits a
flight query (e.g., Boston to San Francisco, March 1, 2011, returning
March 14, 2011), the Web site sends the query to the P&S system. The
P&S system accesses the fare, schedule, and seat availability
information of multiple airlines, and uses a sophisticated algorithm to
analyze the flight possibilities and convert the query into a list of
available flight options. It sends these options back to the OTA or
Meta, which presents the available flight options to the consumer in a
format that facilitates comparison (e.g., organized by price, departure
or arrival time, or number and length of connections). P&S systems
differ in their speed; flexibility; ability to find the lowest price
itinerary; ability to obtain accurate seat availability information;
and breadth of results presented.
18. Although the flight queries submitted on OTA and Meta Web sites
are often simple, the computing challenges involved in providing the
underlying flight search functionality are quite significant. Airfare
pricing and seat availability change from moment to moment, and are
governed by a complex system of fare rules that vary by airline. There
are thousands of possible flight paths that can be used to travel
between any two cities on a given day; when different airlines,
departure and arrival times, and fare codes are taken into account, the
number of possible flight combinations can number in the billions. In
order to present consumers with flight options that are actually
available for purchase, the billions of possible combinations must be
checked against seat availability data and fare rules.
B. Relevant Product Market
1. Comparative Flight Search Services
19. One of the markets affected by this transaction is comparative
flight search services. Comparative flight search service providers
enable consumers to search online for flight prices, schedules, and
seat availability on multiple airlines simultaneously. Comparative
flight search services is a relevant antitrust product market because
no other flight search service is as useful and convenient to
consumers.
20. Current competitors in this market include Metas (e.g., Kayak
and Bing Travel), and OTAs (e.g., Expedia, Orbitz and Travelocity)
whose comparative flight search services can be consumed separately
from their flight booking and other travel services.
21. Airline Web sites and reservation lines are not reasonable
substitutes for comparative flight search services because they do not
allow consumers to compare prices and schedules across multiple
airlines simultaneously. It is significantly more cumbersome for a
consumer to compare flight prices and schedules by going to many
different airlines' Web sites separately, and even then the consumer
might not find the best fare.
22. Using a ``brick and mortar'' travel agent is also not a
reasonable substitute for comparative flight search services online
because travel agents do not provide the same sort of user control,
instantaneous response, and flight search flexibility as OTAs and
Metas.
[[Page 21019]]
23. There are no reasonable substitutes for comparative flight
search services, and thus, a small but significant degradation in the
quality of comparative flight search services or increase in price to
consumers of these services would not cause a significant number of
users to switch to other services, such as airline Web sites or ``brick
and mortar'' travel agents. Accordingly, comparative flight search
services is a relevant product market for purposes of Section 7 of the
Clayton Act.
2. P&S Systems
24. This transaction also impacts the P&S systems market. P&S
systems have two main components: a continuously-updated database of
airline pricing, schedule and seat availability information, and a
software algorithm used to search the database for flight options that
best match consumers' search criteria. The significant competitors in
this market include ITA, Travelport, Sabre, Amadeus, and Expedia.
25. P&S systems is a relevant antitrust product market because no
other comparative flight search technology is as fast or as reliable.
The closest alternative to P&S systems is screen-scraping software
which pulls or ``scrapes'' airline pricing and scheduling information
from airline Web sites and other OTIs instead of accessing a
centralized database of flight pricing, schedule, and seat availability
information. Screen-scraping technology is not a reasonable substitute
for P&S systems because it is significantly slower and less reliable.
26. A small but significant increase in the licensing fees charged
to OTIs for use of P&S systems would not cause a sufficient number of
these sites to substitute to screen scraping technology to make such
price increases unprofitable. Accordingly, P&S systems is a relevant
product market for purposes of Section 7 of the Clayton Act.
C. Relevant Geographic Market
1. Comparative Flight Search Services
27. The relevant geographic market for comparative flight search
services is the United States. All the major OTIs that allow consumers
to compare domestic flight prices and schedules are optimized for use
by U.S. consumers. While some of the Web sites have foreign versions
(e.g., http://www.expedia.co.uk), the foreign versions are not adequate
substitutes for most U.S. consumers because they list flight prices in
their local currency, and sell tickets in that currency, requiring a
currency conversion fee.
2. P&S Systems
28. The relevant geographic market for P&S systems is the United
States. In order for a P&S system to serve U.S. consumers, it must have
access to comprehensive and reliable seat and fare class availability
data on routes with at least one U.S. endpoint, and software which
provides fare, tax, and fee calculations denominated in U.S. dollars.
Accordingly, OTIs serving U.S. consumers cannot reasonably substitute
software that is optimized for a different geographic market (e.g.,
Europe) and not the United States.
D. Anticompetitive Effects
29. The acquisition of ITA by Google is likely to lessen
competition substantially in the market for comparative flight search
services in the United States. After acquiring ITA, Google intends to
use QPX as the back-end technology for its forthcoming comparative
flight search services. Google's travel service will compete with OTIs.
As Google has recognized, QPX is a unique P&S system because it has
superior features that cannot be quickly replaced or replicated. After
acquiring QPX, Google will have the ability and incentive to foreclose
competing OTIs' access to QPX and thereby weaken the ability of its
rivals to compete.
1. ITA's QPX Is Dominant in P&S Systems and Serves as the Leading
Platform for Web Sites Offering the Most Innovative Flight Search
Services
30. Since its entry into the P&S systems market in 2001, ITA has
dramatically expanded its portfolio of customers. ITA has won virtually
every competition for business in the United States in which the
customer did not already have a P&S system provider or product. At the
same time, ITA has lost very few customers. Today, QPX powers all major
Metas and three major OTAs and handles more domestic flight comparison
queries than any other P&S system. QPX is widely recognized as the best
P&S system in the U.S. market due to its superior speed and
flexibility.
31. QPX has a significant speed advantage because it can more
quickly determine seat availability using its proprietary Dynamic
Availability Calculating System (``DACS''). ITA's DACS is a unique
system which can quickly estimate seat availability without polling the
airlines' systems (which slows the process) or relying on data from
prior queries (which is sometimes stale and inaccurate). Speed is
important because the longer it takes to respond to a query, the
greater the likelihood that the consumer will abandon the search and
switch to another flight search site.
32. QPX is also highly configurable. QPX has more than a thousand
different parameters that can be adjusted or ``tuned'' to meet the
needs of individual travel site customers. QPX's flexibility also
allows it to more efficiently handle the complex queries demanded by
more innovative flight search features such as Bing Travel's Fare
Predictor, which predicts whether prices for a particular route are
trending up or down.
33. ITA also leads in P&S system innovation. For example, ITA is
developing a new product called InstaSearch which relies on cutting-
edge computing techniques to significantly reduce query response times.
ITA expects InstaSearch to be particularly useful in reducing the
response times for more innovative flight search features such as
``calendar'' features which allow consumers to search for the lowest
fares for a particular route over a period of weeks or months; and
``anywhere'' features which enable consumers to explore different
destinations by specifying a price range, desired activity (e.g.,
beach, golf, skiing) and desired temperature.
34. QPX's flexible design makes it the tool of choice for Metas.
Indeed, ITA is the only P&S system currently capable of supporting many
of the innovative comparative flight search services that are the core
attraction for these travel sites.
2. Currently Available P&S System Alternatives Are Not Adequate
Substitutes for QPX
35. The three GDSs--Sabre, Travelport and Amadeus--license P&S
systems to third-parties (generally OTAs), but usually as part of a
broader software package that includes booking and ticketing
functionality. In addition, one of the OTAs, Expedia, has a proprietary
P&S system to support its own travel Web site, which is based on a GDS
product, but it has never licensed its system to third parties.
36. QPX's significant qualitative advantages have prompted some
OTIs with ready access to a GDS or proprietary P&S system to license
QPX. For example, Hotwire, an OTA, and TripAdvisor, a Meta, license QPX
even though their corporate affiliate, Expedia, owns and operates its
own proprietary P&S system. Similarly, Orbitz and Cheaptickets are
part-owned (48%) by Travelport, one of the GDS firms, but have opted to
license ITA's QPX
[[Page 21020]]
because it provides superior flight search functionality.
37. ITA has a superior flight search tool and is driving innovation
in P&S system technology. Although the GDS firms and Expedia have
responded by improving their P&S systems, they continue to be followers
rather than leaders. As competition both in P&S systems and comparative
flight search services is driven increasingly by innovation, the GDS
firms have been unable to close the gap allowing ITA to progressively
grow its share.
3. Google Will Have the Incentive To Foreclose Rivals' Access to QPX
38. The proposed merger will eliminate ITA as an independent and
unique source of P&S system technology for competing OTIs, potentially
stripping these sites of the technology needed to support their
existing comparative flight search services, and delaying or deterring
their efforts to develop new flight search features. After the merger,
Google would have the ability to use its ownership of QPX to foreclose
or disadvantage rivals of Google's travel service. For example, Google
could refuse to renew existing QPX contracts, refuse to enter into new
QPX contracts, enter into contracts on less favorable terms than ITA
would have, or degrade the speed or quality of QPX offered to
licensees. Unlike ITA, Google plans to develop a travel Web site.
Therefore, Google will have the incentive to weaken competing OTIs by
denying or degrading their access to QPX because increased profits from
driving customers to its new travel service from rival OTIs will likely
outweigh any lost profits from reduced licensing revenues from QPX.
39. The elimination of an independent ITA will also reduce travel
site innovation. ITA partners with many different travel sites, and
consumers have benefitted from the variety of flight search features
that these collaborations have produced. Thus, consumers are likely to
be harmed through reduced innovation and diminished consumer choice in
the comparative flight search services market.
40. Finally, the proposed merger will provide Google access to
competitively sensitive information from competing OTIs relating to
their use of QPX, including tuning parameters and plans to offer new or
improved services. Disclosure of such competitively sensitive
information from competitors to Google will likely harm competition in
the market for comparative flight services.
E. Difficulty of Entry in the Comparative Flight Search Services Market
41. The proposed merger would raise entry barriers into the
comparative flight search market by placing QPX into Google's hands and
beyond the reach of potential entrants. P&S systems are a critical
input to the provision of comparative flight search services. No other
firm offers a P&S system that is comparable to QPX.
42. The entry barriers associated with developing a new P&S system
are extremely high. Indeed, two firms, Vayant and Everbread, have been
developing P&S systems for several years, but have yet to garner any
significant U.S.-based OTIs as customers. In addition, Google looked at
developing its own P&S system as an alternative to acquiring ITA but
concluded it would take several years and require numerous engineers
due to the complexity of the algorithms.
VI. Violation Alleged
43. The United States incorporates the allegations of paragraphs 1
through 41 above.
44. The proposed transaction between Google and ITA would likely
substantially lessen competition in interstate trade and commerce in
violation of Section 7 of the Clayton Act, 15 U.S.C. 18, in the market
for comparative flight search services in the United States.
VII. Relief Requested
45. The United States request that:
a. The proposed merger of Google and ITA be adjudged to violate
Section 7 of the Clayton Act, 15 U.S.C. 18;
b. Google and ITA be enjoined from carrying out the proposed merger
or carrying out any other agreement, understanding, or plan by which
Google and ITA would acquire, be acquired by, or merge with each other;
c. The United States be awarded their costs of this action; and
d. The United States receive such other and further relief as the
case requires and the Court deems just and proper.
Dated: April 8, 2011.
Respectfully submitted,
For Plaintiff United States:
Katherine B. Forrest,
Deputy Assistant Attorney General.
Joseph F. Wayland,
Deputy Assistant Attorney General.
Patricia A. Brink,
Director of Civil Enforcement.
James J. Tierney,
(DC Bar 434610),
Chief.
Scott A. Scheele
(DC Bar 429061), Assistant Chief, Networks and Technology
Enforcement Section.
Aaron D. Hoag,
Attorney, Networks and Technology Enforcement Section, Antitrust
Division, U.S. Department of Justice, 450 Fifth Street, NW., 7th
Floor, Washington, DC 20530. Telephone: (202) 307-6153. Fax: (202)
616-8544. E-mail: [email protected].
Michael D. Bonanno,
(DC Bar 998208),
Kent Brown,
Pam Cole,
Aaron Comenetz
(DC Bar 479572),
Lauren I. Dubick,
John F. Greaney,
F. Patrick Hallagan,
Danielle G. Hauck,
Anurag Maheshwary
(DC Bar 490535),
Alexander Paul Okuliar
(DC Bar 481103),
Kathleen S. O'Neill,
Adam T. Severt,
Ryan S. Struve
(DC Bar 495406),
Jennifer A. Wamsley
(DC Bar 486540),
Attorneys for the United States.
Certificate of Service
I, Aaron D. Hoag, hereby certify that on April 8, 2011, I caused a
copy of the Complaint to be served on defendants Google Inc. and ITA
Software, Inc. by mailing the document via e-mail to the duly
authorized legal representatives of the defendants, as follows:
For Google:
John D. Harkrider,
Axinn, Veltrop & Harkrider LLP, 114 West 47th Street, New York, NY
10036, E-mail: [email protected].
For ITA:
Michele Sasse Harrington, Hogan Lovells US LLP, 555 Thirteenth
Street, NW., Washington, DC 20004. E-mail:
[email protected].
For Plaintiff United States of America
Aaron D. Hoag, Attorney, U.S. Department of Justice, Antitrust
Division, 450 Fifth Street, NW., 7th Floor, Washington, DC 20530.
Tel: (202) 307-6153. Fax: (202) 616-8544. E-mail:
[email protected].
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Google Inc., and ITA
Software, Inc., Defendants.
Civil Action No. 1:11-cv-00688.
Filed: 4/8/2011.
Competitive Impact Statement
Plaintiff United States of America (``United States''), pursuant to
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact
Statement relating to the proposed Final Judgment
[[Page 21021]]
submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of This Proceeding
On July 1, 2010, Google Inc. (``Google'') entered into a merger
agreement to acquire ITA Software Inc. (``ITA'') for $700 million. ITA
develops and licenses a software product called ``QPX.'' QPX is used by
many airlines, online travel agents and online travel search sites to
provide extremely complex and customized flight search functionality to
consumers. QPX has unique capabilities and acts as a type of mini-
search engine for travel sites. When a customer wants to know the
availability and cost of flights from Boston to San Francisco, for
example, QPX is the tool that provides the answer.
Google intends to offer an online travel search product that will
compete with existing travel search sites that provide the ability to
search for airfares across a range of airlines, many of whom use QPX;
these Web sites are referred to as Online Travel Intermediaries
(``OTIs''). In essence, Google is acquiring a critical input not
previously owned by a company that is a horizontal competitor to users
of ITA. This transaction therefore posed a significant risk that Google
could use the acquisition to foreclose rivals or unfairly raise their
costs. Accordingly, the United States brought this lawsuit against
Google and ITA on April 8, 2011, seeking to enjoin the proposed
transaction. Following a thorough investigation, the United States
believes that, unless enjoined, the likely effect of the transaction as
proposed by the parties would be to lessen competition substantially
for comparative flight search services in violation of Section 7 of the
Clayton Act, 15 U.S.C. 18. This loss of competition likely would result
in reduced innovation and reduced consumer choice in the comparative
flight search market.
Simultaneous with the filing of the Complaint, the United States
also filed a proposed Final Judgment designed to remedy the Section 7
violation. The Final Judgment does not settle any claims which may
arise under any other provisions of the laws, including Section 2 of
the Sherman Act.
Under the proposed Final Judgment, which is explained more fully
below, Defendants are subject to a variety of affirmative obligations,
all of which are designed to ensure ongoing access to QPX for current
ITA licensees and to enable new entrants or new licensees to obtain the
QPX software on fair, reasonable, and non-discriminatory terms. The
licensing provisions require Google to honor existing QPX licenses for
OTIs, renew existing licenses under similar terms and conditions, and
offer licenses to any OTIs not under contract on fair, reasonable, and
non-discriminatory terms, judged in reference to similarly situated
entities. Google must continue with the development of ordinary course
upgrades and enhancements to QPX, and must devote substantially as many
resources to research and development for QPX as ITA did prior to the
acquisition. Google must license InstaSearch, an add-on to QPX which
enables consumers to enter more flexible and creative queries in
searching for flights. Google must observe strict firewall commitments
to ensure the confidentiality of licensee information. In addition,
Google must report certain complaints that it has directly or
indirectly treated OTIs unfairly. This obligation will enable OTIs who
believe that Google has acted in an unfair manner with respect to
flight search advertising \1\ to make complaints and have written
complaints brought directly to the attention of the Department of
Justice.
---------------------------------------------------------------------------
\1\ Google has the largest online search engine and generates
revenue through the sale of online advertising.
---------------------------------------------------------------------------
Google's affirmative obligations ensure that OTIs will have
continued access to QPX after the merger, while preserving Google's
ability to use QPX and ITA's engineering talent as a platform for
developing new and innovative flight search services for consumers. The
proposed Final Judgment therefore strikes an appropriate balance
between competing interests by preserving the potential significant
efficiencies from the combination of Google's and ITA's complementary
expertise while redressing the potential for anticompetitive
foreclosure that could result from the acquisition.
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA, unless
the United States withdraws its consent. Entry of the proposed Final
Judgment would terminate this action, except that this Court would
retain jurisdiction to construe, modify, and enforce the proposed Final
Judgment and to punish violations thereof.
II. Description of the Events Giving Rise to the Alleged Violation
A. The Comparative Flight Search Industry
Over the past decade, consumer access to direct search and booking
of air travel has been revolutionized. The Internet has provided
consumers with tools that enable them directly to search for customized
itineraries. Innovation in flight search tools has provided consumers
with quick and convenient access to the most responsive and useful
itineraries and prices. Two different types of Web sites enable U.S.
consumers to conduct Internet searches for domestic flight prices,
schedules, and seat availability on multiple airlines simultaneously:
Online travel agencies (``OTAs'') and travel meta-search engines
(``Metas''). In many respects, OTAs function like the online equivalent
of brick and mortar travel agents, assisting users in identifying
travel options and then in booking the consumer's choice. Examples of
OTAs are Expedia, Travelocity, and Priceline. By contrast, the so-
called Metas, such as Kayak, TripAdvisor, and Bing Travel, provide
highly differentiated products with broad search capabilities--
functioning almost like mini-search engines to enable consumers to
search for flights. The Metas, however, do not offer direct booking
services (i.e., to purchase a ticket, consumers must click a link to an
airline's Web site or to an OTA). The largest Metas are all powered by
QPX. In addition to providing comparative flight search services, both
Metas and OTAs often enable consumers to search for other travel
products and services such as hotel rooms, rental cars, and vacation
packages. When described together, OTAs and Metas constitute OTIs.
To perform a flight search on any OTI, a consumer typically enters
an origin and destination city and desired travel dates. The OTI then
provides a number of options on different airlines with varying routes
and pricing. Some travel sites--particularly the Metas powered by QPX,
which has some unique capabilities and advantages--also offer more
sophisticated and innovative flight search features, such as a fare
predictor that allows consumers to identify the best time to buy a
ticket for a particular trip, or an ``anywhere'' feature that allows
them to explore different destinations by specifying a desired price
range, activity, and/or temperature at the destination.
To provide flight search functionality, OTIs rely on pricing and
shopping (``P&S'') systems. ITA's QPX is a sophisticated P&S system
that is
[[Page 21022]]
differentiated in several respects from its competitors. P&S systems
include not only the engine that performs the search, but also on-going
access to seat and fare class availability data. When a consumer on a
OTI Web site submits a flight query (e.g., Boston to San Francisco,
departing March 1, 2011, returning March 14, 2011), the Web site sends
the query to the P&S system. The P&S system accesses the fare,
schedule, and seat availability information of multiple airlines, and
uses a sophisticated algorithm to analyze the flight possibilities and
convert the query into a list of available flight options. It sends
these options back to the OTI, which presents the available flight
options to the consumer in a format that facilitates comparison (e.g.,
organized by price, departure or arrival time, or number and length of
connections). QPX is a highly accurate and well developed P&S system.
B. The Defendants and the Proposed Transaction
Google's principal business is an online search engine. Measured by
the number of search queries or advertising revenue, Google is the
largest search engine by far. See Author's Guild v. Google, No. 05 Civ.
8136 (DC), 2011 WL 986049, at *12 (S.D.N.Y. Mar. 22, 2011) (recognizing
``Google's market power in the online search market''). In 2009, Google
earned more than $23 billion in revenues in the United States. Google
derives nearly all of its revenue from online search advertising, or
the ads accompanying search engine results.
Google's only significant online search engine competitor is Bing,
which has a much smaller share of both queries and advertising revenue.
In addition to providing general purpose search engines, Google and
Bing also provide specialized search sites, known as ``vertical''
sites. Bing, for example, offers a travel site that utilizes QPX to
provide comparative flight search services. In conjunction with its
acquisition of QPX, Google has announced its intention to launch new
travel search functionality on its Web sites.
ITA is the leading producer of P&S systems in the United States.
ITA's software is widely used by airlines and OTIs to search for,
price, and display results for airline travel queries.
On July 1, 2010, Google and ITA entered into a merger agreement.
Unremedied, this transaction would provide Google with the incentive
and ability to foreclose rivals (actually or effectively) from the
comparative flight search market. This could be accomplished by
preventing licensees and potential licensees access to the leading
comparative flight search product, QPX, or by hobbling them by failing
to continue development at levels commensurate with the pre-merger
environment. This would diminish competition in this market and
effectively diminish consumer choice. The transaction would
substantially lessen competition in the comparative flight search
market and is the subject of the Complaint and proposed Final Judgment
filed by the United States in this matter.
C. Relevant Markets
Antitrust law, including Section 7 of the Clayton Act, protects
consumers from anticompetitive conduct, such as firms' acquisition of
the ability to raise prices or reduce choice. Market definition assists
antitrust analysis by focusing attention on those markets where
competitive effects are likely to be felt. Well-defined markets
encompass the economic actors including both sellers and buyers whose
conduct most strongly influences the nature and magnitude of
competitive effects. To ensure that antitrust analysis takes account of
a broad enough set of products to evaluate whether a transaction is
likely to lead to a substantial lessening of competition, defining
relevant markets in merger cases frequently begins by identifying a
collection of products or set of services over which a hypothetical
monopolist profitably could impose a small but significant and non-
transitory increase in price.
Here, the United States's investigation revealed that all OTIs rely
on a P&S system, such as ITA's QPX, to drive the comparative airfare
search offerings such Web sites offer their users. Should one company
control all P&S systems, OTIs would have no alternative products to
which they could turn to defeat a price increase. As such, the market
for P&S systems is a relevant product market.
The comparative flight search market is an additional relevant
market implicated by this merger. The market participants are OTIs that
offer the ability for users to compare flights and prices across
different airlines. Comparative flight search is a relevant market
because there are no reasonable substitutes consumers could turn to if
a company controlling all comparative flight search Web sites reduced
the quality of its service. Airline Web sites and reservation lines are
not reasonable substitutes because they do not offer the comparative
aspect of OTIs. Brick and mortar travel agents are also not reasonable
substitutes because travel agents do not provide the same sort of user
control, instantaneous response, and flight search flexibility as OTIs.
Accordingly, comparative flight search services is a relevant product
market.
Antitrust analysis must also consider the geographic dimensions of
competition. Here, the relevant markets exist within the United States
and are not affected by competition outside the United States. The
competitive dynamics for both markets is distinctly different outside
the United States.
D. Competitive Effects
Since its introduction to the market in 2001, ITA has been the
leader in P&S systems. ITA has won nearly every competition for
business in the United States in which the customer did not already
have a P&S system in place. ITA has also lost very few customers due to
its ability to provide highly and uniquely customized P&S
functionality. ITA's customers include two of the five largest OTAs in
the United States, and all five of the largest Metas. ITA's P&S system,
QPX, has an advantageous position against its competitors in terms of
speed, configurability, and accuracy. QPX consistently leads the
industry in innovation. In short, ITA has a leading position in P&S
systems. From a competition perspective, ITA's corporate independence
from any particular OTI ensures that all of its customers receive the
benefits of ITA's cutting edge innovation--i.e., there is currently no
vertically integrated OTI owned by ITA that receives favorable
treatment relative to ITA's other customers.
This will not be the case once Google purchases ITA. Google intends
to launch a new service after completing the transaction that will
compete directly with other OTIs by providing flight search results.
Because so many OTIs rely on ITA as an input to their services, Google
will have the ability and incentive to either shut off access to ITA to
those competitors, or degrade the quality of QPX that is available to
those competitors. Such actions in the upstream pricing and shopping
market would substantially reduce competition in the downstream
comparative flight search market.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment sets forth: (1) Requirements regarding
the parties' continued licensing and improvement of QPX; (2)
requirements regarding the parties' licensing of InstaSearch, a new
flight search technology under development by ITA; (3) procedures for
resolving disputes
[[Page 21023]]
between OTIs and the parties regarding licensing of QPX or InstaSearch;
(4) requirements for the creation of a firewall at the parties'
business regarding use of competitively sensitive information gained
through provision of QPX or InstaSearch services; and (5) oversight
procedures the United States may use to ensure compliance with the
proposed Final Judgment. Section IX of the proposed Final Judgment
states that these provisions will expire five years after entry of the
proposed Final Judgment.
As discussed earlier, the United States' concerns regarding the
proposed transaction revolve around Google's ability and incentive to
weaken its competitors in the comparative flight search market by
denying or degrading their access to QPX. Denying or degrading rivals'
access to QPX would potentially diminish competition in the comparative
flight search market. Therefore, as discussed in more detail below, the
key remedies embodied within the proposed Final Judgment include
guarantees that the key products on which OTIs rely will continue to be
available in a robust fashion for at least five years after the entry
of the Final Judgment. Five years will provide those OTIs that do not
wish to be dependent on Defendants' P&S system a sufficient period of
time to switch to an alternative system.
A. Licensing and Improving of QPX
Section IV.A-G of the proposed Final Judgment preserves competition
for OTIs by creating a legally enforceable commitment that Defendants
will continue to license and improve QPX. Sections IV.A-C require
Defendants to honor the terms of all QPX agreements in effect as of the
entry of the Final Judgment, negotiate extensions to existing QPX
agreements with any OTI on the terms set forth in the OTI's existing
contract for up to five years from the entry of the Final Judgment, and
negotiate new QPX agreements with any OTI who is not party to an
existing QPX agreement on terms that are fair, reasonable, and non-
discriminatory.
Section IV.D prohibits Defendants from entering into any new QPX
agreement that would prevent an OTI from using alternative products to
QPX. Defendants and an OTI, however, are free to enter into an
exclusive QPX agreement if Defendants offer a non-exclusive agreement
on fair, reasonable, and non-discriminatory terms.
Section IV.E requires Defendants to make available to OTIs ordinary
course upgrades to QPX at the same price those upgrades are made
available to other customers. Section IV.F requires Defendants to
devote substantially the same resources to the research and development
and maintenance of QPX for the use of customers as ITA did in the
average of the two years prior to the filing of the Complaint. This
requirement eases concerns that post-merger Defendants will let the QPX
product languish without committing resources to improve it over time.
Finally, Google intends to introduce a new travel search service
that will include airfare pricing and shopping functionality. Section
IV.G provides that Defendants are not required to offer OTIs any
product, service or functionality that Google develops exclusively for
its new travel search service.
B. Licensing of InstaSearch
Prior to the proposed transaction, ITA was developing a product,
called InstaSearch, for license to customers that promised to be the
next generation in pricing and shopping services. InstaSearch was being
developed to use a cache of results to provide instantaneous or near-
instantaneous results to airfare search queries. One concern of the
proposed transaction is that Google will prevent this innovative
product from being made available to its OTI competitors. As such, the
decree aims to ensure InstaSearch is available for license.
Sections IV.H-J of the proposed Final Judgment preserves
competition for OTIs by requiring Defendants to negotiate InstaSearch
agreements for terms up to five years from the entry of the Final
Judgment. While ITA developed InstaSearch for future sale, it has not
sold a commercial version of the product to any customers. ITA,
however, has entered into a contract with one customer to deliver a
``proof of concept'' implementation of InstaSearch. The proposed Final
Judgment requires Defendants to offer OTIs at least the same
functionality as contained in the proof of concept attached to the
proposed Final Judgment, and requires Defendants to make commercially
reasonable efforts to ensure that the InstaSearch implementation
conforms to the proposed technical specifications. Should Defendants
provide an InstaSearch implementation to any of their customers that is
superior to the version envisioned by the proof of concept, the
proposed Final Judgment requires Defendants to make that improved
product available to all OTIs. Finally, the proposed Final Judgment
allows Defendants to charge fair, reasonable and non-discriminatory
fees for InstaSearch.
C. Arbitration Provisions
The proposed Final Judgment requires that the Defendants negotiate
in good faith with any OTI, but also sets forth certain procedures by
which Defendants and OTIs can resolve disputes over the fees charged
for any type of service should Defendants and an OTI not reach
agreement over fees. As described in Sections IV.K-M, Defendants shall
submit to binding arbitration over the disputed fees once certain
conditions have been met. The Defendants and the OTI must, prior to
submitting a matter to arbitration, designate a person at each company
with the authorization to resolve the dispute in a final and binding
fashion, and those individuals must meet in an attempt to resolve a
dispute. Additionally, prior to Defendants' being obligated to enter
into binding arbitration with an OTI, that OTI must certify to the
United States that it negotiated in good faith with Defendants, and
further receive consent of the United States to initiate arbitration.
Upon receiving consent of the United States to initiate arbitration,
the OTI may commence arbitration through the American Arbitration
Association. The parties may agree to suspend the arbitration
proceedings to attempt to resolve the dispute.
These procedures ensure that Defendants negotiate in good faith
with all OTIs, and that if an agreement cannot be reached between the
OTI and Defendants on a price term, that a resolution can be had
quickly by an impartial third party using clear benchmarks from
existing contracts. For non-price terms, the traditional decree
enforcement provisions will provide the mechanism for resolving
disputes.
D. Additional Provisions
Section V of the proposed Final Judgment prohibits Google from
taking certain actions that could undermine the purpose of the proposed
Final Judgment. Access to airline seat and booking class information is
a critical input to a P&S system. To ensure that Defendants do not
restrict access to this crucial information, Section V.A prohibits
Defendants from entering into agreements with an airline that restricts
the airline's right to share seat and booking class information with
Defendants' competitors, unless one or more airlines enter into
exclusive agreements with a competitor. Subject to certain limitations,
Sections V.B-C require Google to make available to OTIs any seat and
booking class information Defendants obtain for use in Google's new
flight search service. Finally, Section V.D prohibits Defendants from
[[Page 21024]]
conditioning the provision of QPX or InstaSearch on whether or how much
an OTI spends on other products or services sold by Google.
E. Firewall Requirements
As alleged in the Complaint, Defendants could use information and
data gained through contracts with OTIs to then compete with those
OTIs. Section VI of the proposed Final Judgment requires Defendants to
establish a firewall at the company to prevent the misappropriation of
competitively sensitive information and data. That section requires
that Defendants only use an OTI's confidential information for the
provision of any product or service to that specific OTI, for routine
administrative or financial purposes, or for the continued development
and improvement of QPX or InstaSearch. Google may use more limited
query information, which does not include data regarding how OTIs
configure the QPX product, for the improvement of Defendants' airfare
pricing and shopping engines. Section VI.A prohibits, subject to a
small list of exclusions, employees working on Google's travel search
product from accessing confidential OTI information. Section VI.D
requires Defendants to implement procedures to prevent confidential
information from being used or accessed by employees other than those
having a legitimate need for such information. Finally, Section VI.E
requires the Defendants to submit its proposed procedures to the United
States for its approval or rejection of those procedures.
F. Compliance
To facilitate monitoring of Defendants' compliance with the
proposed Final Judgment, Section VII grants the United States access,
upon reasonable notice, to Defendants' records and documents relating
to matters contained in the proposed Final Judgment. Defendants must
also make their employees available for interviews or depositions about
such matters. Moreover, upon request, Defendants must answer
interrogatories and prepare written reports relating to matters
contained in the proposed Final Judgment.
In addition, Sections IV.N-O requires Google to create a Web site
where OTIs can access a copy of the proposed Final Judgment and submit
complaints that Google is violating the terms of the proposed Final
Judgment or is acting, directly or indirectly, in an unfair manner in
connection with flight search advertising in the United States. Google
must provide copies of these complaints to the United States for a
period of time from the earlier of five years from entry of the
proposed Final Judgment, or two years from the date Google launches its
new travel flight search service.
IV. Remedies Applicable to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in Federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against Defendants.
V. Procedures Applicable for Approval or Modification of the Proposed
Final Judgment
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least 60 days preceding the
effective date of the proposed Final Judgment within which any person
may submit to the United States written comments regarding the proposed
Final Judgment. Any person who wishes to comment should do so within 60
days of the date of publication of this Competitive Impact Statement in
the Federal Register, or the last date of publication in a newspaper of
the summary of this Competitive Impact Statement, whichever is later.
All comments received during this period will be considered by the
United States, which remains free to withdraw its consent to the
proposed Final Judgment at any time prior to the Court's entry of
judgment. The comments and the response of the United States will be
filed with the Court and published in the Federal Register.
Written comments should be submitted to: James J. Tierney, Chief,
Networks & Technology Enforcement Section, Antitrust Division, United
States Department of Justice, 450 Fifth Street, NW., Suite 7100,
Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, seeking preliminary and permanent injunctions against
Defendants' transaction and proceeding to a full trial on the merits.
The United States is satisfied, however, that the relief in the
proposed Final Judgment will preserve competition in the comparative
flight search market. Thus, the proposed Final Judgment would protect
competition as effectively as would any remedy available through
litigation, but avoids the time, expense, and uncertainty of a full
trial on the merits.
VII. Standard of Review Under the APPA for Proposed Final Judgment
The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a 60-day comment period, after which the Court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. 16(e)(1). In making that determination,
the Court, in accordance with the statute as amended in 2004, is
required to consider:
(A) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration of relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a
determination of whether the consent judgment is in the public
interest; and
(B) The impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors,
the Court's inquiry is necessarily a limited one as the United States
is entitled to ``broad discretion to settle with the Defendant within
the reaches of the public interest.'' United States v. Microsoft Corp.,
56 F.3d 1448, 1461 (DC Cir. 1995); see generally United States v. SBC
Commc'ns, Inc., 489 F. Supp. 2d 1
[[Page 21025]]
(D.D.C. 2007) (assessing public interest standard under the Tunney
Act); United States v. InBev N.V./S.A., 2009-2 Trade Cas. (CCH) ]
76,736, 2009 U.S. Dist. LEXIS 84787, No. 08-1965 (JR), at *3 (D.D.C.
Aug. 11, 2009) (noting that the court's review of a consent judgment is
limited and only inquires ``into whether the government's determination
that the proposed remedies will cure the antitrust violations alleged
in the complaint was reasonable, and whether the mechanism to enforce
the final judgment are clear and manageable'').\1\
\1\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for a court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns,
489 F. Supp. 2d at 11 (concluding that the 2004 amendments
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------
Under the APPA a court considers, among other things, the
relationship between the remedy secured and the specific allegations
set forth in the United States's complaint, whether the decree is
sufficiently clear, whether enforcement mechanisms are sufficient, and
whether the decree may positively harm third parties. See Microsoft, 56
F.3d at 1458-62. With respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d
at 1460-62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40
(D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Courts have
held that:
[t]he balancing of competing social and political interests
affected by a proposed antitrust consent decree must be left, in the
first instance, to the discretion of the Attorney General. The
court's role in protecting the public interest is one of insuring
that the government has not breached its duty to the public in
consenting to the decree. The court is required to determine not
whether a particular decree is the one that will best serve society,
but whether the settlement is `within the reaches of the public
interest.' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ In
determining whether a proposed settlement is in the public interest, a
district court ``must accord deference to the government's predictions
about the efficacy of its remedies, and may not require that the
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F.
Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461 (noting the need
for courts to be ``deferential to the government's predictions as to
the effect of the proposed remedies''); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that
the court should grant due respect to the United States's prediction as
to the effect of proposed remedies, its perception of the market
structure, and its views of the nature of the case).
\2\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass''). See generally Microsoft, 56 F.3d at 1461
(discussing whether ``the remedies [obtained in the decree are] so
inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest.' '').
---------------------------------------------------------------------------
In addition, ``a proposed decree must be approved even if it falls
short of the remedy the court would impose on its own, as long as it
falls within the range of acceptability or is `within the reaches of
public interest.' '' United States v. Am. Tel. & Tel. Co., 552 F. Supp.
131, 151 (D.D.C. 1982) (citations omitted) (quoting United States v.
Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd sub nom.
Maryland v. United States, 460 U.S. 1001 (1983); see also United States
v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985)
(approving the consent decree even though the court would have imposed
a greater remedy). To meet this standard, the United States ``need only
provide a factual basis for concluding that the settlements are
reasonably adequate remedies for the alleged harms.'' SBC Commc'ns, 489
F. Supp. 2d at 17.
Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also InBev, 2009
U.S. Dist. LEXIS 84787, at *20 (``[T]he `public interest' is not to be
measured by comparing the violations alleged in the complaint against
those the court believes could have, or even should have, been
alleged.''). Because the ``court's authority to review the decree
depends entirely on the government's exercising its prosecutorial
discretion by bringing a case in the first place,'' it follows that
``the court is only authorized to review the decree itself,'' and not
to ``effectively redraft the complaint'' to inquire into other matters
that the United States did not pursue. Microsoft, 56 F.3d. at 1459-60.
Courts ``cannot look beyond the complaint in making the public interest
determination unless the complaint is drafted so narrowly as to make a
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments, Congress made clear its intent to preserve
the practical benefits of utilizing consent decrees in antitrust
enforcement, adding the unambiguous instruction that ``[n]othing in
this section shall be construed to require the court to conduct an
evidentiary hearing or to require the court to permit anyone to
intervene.'' 15 U.S.C. 16(e)(2). This language effectuates what
Congress intended when it enacted the Tunney Act in 1974, as Senator
Tunney explained: ``[t]he court is nowhere compelled to go to trial or
to engage in extended proceedings which might have the effect of
vitiating the benefits of prompt and less costly settlement through the
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of
Senator Tunney). Rather, the procedure for the public interest
determination is left to the discretion of the Court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC
Commc'ns, 489 F. Supp. 2d at 11.\3\
---------------------------------------------------------------------------
\3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone'');
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ]
61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing of corrupt
failure of the government to discharge its duty, the Court, in
making its public interest finding, should * * * carefully consider
the explanations of the government in the competitive impact
statement and its responses to comments in order to determine
whether those explanations are reasonable under the
circumstances.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6
(1973) (``Where the public interest can be meaningfully evaluated
simply on the basis of briefs and oral arguments, that is the
approach that should be utilized.'').
---------------------------------------------------------------------------
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that the United States considered in formulating
the proposed Final Judgment.
Dated: April 8, 2011.
Respectfully submitted,
For Plaintiff United States of America,
Aaron D. Hoag, Attorney, U.S. Department of Justice, Antitrust
Division, 450 Fifth Street, NW., 7th Floor, Washington, DC 20530,
Tel: (202) 307-6153, Fax: (202) 616-8544, E-mail:
[email protected].
[[Page 21026]]
Certificate of Service
I, Aaron D. Hoag, hereby certify that on April 8, 2011, I caused a
copy of the Competitive Impact Statement to be served on defendants
Google Inc. and ITA Software, Inc. by mailing the document via e-mail
to the duly authorized legal representatives of the defendants, as
follows:
For Google:
John D. Harkrider,
Axinn, Veltrop & Harkrider LLP, 114 West 47th Street, New York, NY
10036, E-mail: [email protected].
For ITA:
Michele Sasse Harrington, Hogan Lovells U.S. LLP, 555 Thirteenth
Street, NW., Washington, DC 20004, E-mail:
[email protected].
For Plaintiff United States of America
Aaron D. Hoag, Attorney, U.S. Department of Justice, Antitrust
Division, 450 Fifth Street, NW., 7th Floor, Washington, DC 20530,
Tel: (202) 307-6153, Fax: (202) 616-8544, E-mail:
[email protected].
United States District Court for the District of Columbia
United States of America, Plaintiff v. Google Inc. and ITA
Software, Inc. Defendants.
[Proposed] Final Judgment
Whereas, Plaintiff United States of America (``United States'')
filed its Complaint on April 8, 2011, the United States and Defendants
Google Inc. and ITA Software, Inc., by their respective attorneys, have
consented to entry of this Final Judgment without trial or adjudication
of any issue of fact or law, and without this Final Judgment
constituting any evidence against or admission by any party regarding
any issue of fact or law;
And whereas, Defendants agree to be bound by the provisions of the
Final Judgment pending its approval by the Court;
And whereas, the United States requires that Defendants agree to
undertake certain actions and refrain from certain conduct for the
purpose of remedying the loss of competition alleged in the Complaint;
And whereas, Defendants have represented to the United States that
the actions and conduct restrictions can and will be undertaken and
that Defendants will later raise no claim of hardship or difficulty as
grounds for asking the Court to modify any of the provisions contained
below;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of
Defendants, it is ordered, adjudged and decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against Defendants under Section 7 of the Clayton
Act, as amended (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ``AAA'' means the American Arbitration Association.
B. ``Affiliate'' means, with respect to any entity, another entity
that controls, is controlled by or is under common control of the first
entity.
C. ``Airline Customer'' means a Customer that operates an airline
or is an Affiliate of an airline.
D. ``Availability Information'' means information about the
availability of a seat at a specific booking class on a specific flight
obtained by ITA as an input to QPX, including information in ITA's
Dynamic Availability Calculating System and its system for processing
other types of availability data, including Availability Status
(``AVS'') and Numeric Availability Status (``NAVS''), but excluding
fully computed pricing and shopping results.
E. ``Covered Employee'' means an employee of a Defendant having as
a job responsibility the day-to-day development of, or day-to-day
strategic decision-making with respect to, the Google Consumer Flight
Search Service, other than an Excepted Employee.
F. ``Customer'' means a company that has entered into a QPX
Agreement or an agreement for InstaSearch with Defendants. Customer
does not include Google or ITA.
G. ``Customized Software'' means any version of QPX or the
InstaSearch Service that is modified specifically for a Customer in
response to a request made by a Customer for particular features or
functionality not included in the commercially available version of QPX
or the InstaSearch Service. If the modified version is made available
to other Customers (other than Affiliates of the requesting Customer),
it no longer qualifies as ``Customized Software'' (provided that
Customized Software that is provided in response to good faith requests
from two or more Customers may be substantially similar).
H. ``Database Query,'' with respect to any OTI, has the definition
set forth in the QPX Agreement in effect between ITA and such OTI (or a
definition given therein for ``observation query'').
I. ``Defendants'' means Google and ITA, as defined below, and any
successor or assign to all or substantially all of the business or
assets of Google and ITA involved in the provision of QPX, the
InstaSearch Service, or the Google Consumer Flight Search Service.
J. ``Embedded Software'' means any version of QPX or the
InstaSearch Service that is modified from the commercially available
version for the purpose of integrating it into software that provides
significantly greater functionality than QPX or the InstaSearch
Service, such as a passenger reservation system or Internet booking
engine. The software into which such version of QPX is integrated shall
also be deemed ``Excluded Software.''
K. ``EU'' means an execution unit (a measure of the independent
processing cores in a server). For example, a single core such as an
Intel Pentium 4 has one EU, whereas a dual core chip such as the Intel
Pentium D has two EUs. A dual Intel Pentium D server, in turn, would
have four EUs.
L. ``Excepted Employee'' means an individual employed by ITA at the
time of the complaint in this matter who has been designated in writing
by Defendants and approved by the United States. With the consent of
the United States, which shall not be unreasonably withheld, Defendants
shall be entitled to designate a replacement for any Excepted Employee
who is no longer employed by Defendants or ceases to have day-to-day
job responsibilities involving QPX or InstaSearch.
M. ``Excluded Information'' means:
(1) Information available to the public or obtained by a Defendant
from a third-party not under an obligation of confidentiality to the
OTI licensee of QPX who disclosed such information to a Defendant;
(2) Information obtained by Google as part of its Web search
business;
(3) Information provided to a Defendant in connection with a
product or service other than QPX or the InstaSearch Service; and
(4) Schedule, fare, flight or availability information of any
airline.
N. Nothing in any QPX Agreement shall be read as modifying the
definition of Excluded Information so as to require Defendants to treat
any Excluded Information as OTI Confidential Information pursuant to
this Final Judgment.
O. ``Excluded Software'' means (i) Customized Software; (ii)
Embedded Software; and (iii) Experimental Software.
P. ``Experimental Software'' means a beta or test version of QPX or
the InstaSearch Service that is made available to a limited number of
customers, for a limited period of time,
[[Page 21027]]
specifically for the purpose of testing new or modified features prior
to the commercial release of those new or modified features as part of
QPX or the InstaSearch Service. While Defendants remain free to
determine whether a new or modified feature is ever ultimately
incorporated into the commercially available version of QPX or the
InstaSearch Service that must be licensed pursuant to this Final
Judgment, Defendants may not use the exclusion of Experimental Software
to circumvent the licensing obligation set forth in Section IV.E.
Q. ``Final Offer'' means the proposed pricing terms for a QPX
Agreement and/or InstaSearch Agreement, pursuant to which Defendants
will provide QPX and/or InstaSearch to the OTI.
R. ``Google'' means Defendant Google Inc., a Delaware corporation
headquartered in Mountain View, California, any successor to all or
substantially all of its business or assets, and its subsidiaries
(whether partially or wholly owned), divisions, groups, Affiliates,
partnerships, and joint ventures, and their directors, officers,
managers, agents, and employees (but excluding in all cases ITA, as
defined below).
S. ``Google Consumer Flight Search Service'' means a publicly
available Web site, product or service owned or operated by a Defendant
that provides airfare price, schedule or Availability Information to
consumers based on results returned from an airfare pricing and
shopping engine, as well as any syndicated versions thereof.
T. ``Google Services'' means Web sites, products or services owned
or operated by a Defendant, including but not limited to the Google
Consumer Flight Search Service.
U. ``InstaSearch'' means a technology under development by ITA
prior to the date of the Complaint herein in which specified pricing
and shopping queries are pre-computed using QPX, stored in a cache and
made available to one or more Customers from the cache.
V. ``InstaSearch Agreement'' means an agreement between a Defendant
and an OTI, negotiated pursuant to the terms of this Final Judgment,
providing such OTI the right to submit queries to the InstaSearch
Service, subject to the terms and conditions set forth in Section IV.H
of this Final Judgment.
W. ``InstaSearch Proof of Concept'' means a specific implementation
of InstaSearch, incorporating a QPX cache and associated interfaces,
that ITA, prior to the date of the Complaint herein, agreed to deliver
as a proof-of-concept to a Customer, as more fully defined in a
Solution Document/Interface Definition Document (the ``InstaSearch POC
Solution Document''), attached to this Final Judgment as Exhibit 1.
X. ``InstaSearch Service'' means the service to be offered by
Defendants to OTIs as required by this Final Judgment having the same
InstaSearch functionality as the InstaSearch Proof of Concept but
permitting an OTI to vary the number of covered markets and the
targeted refresh rate.
Y. ``ITA'' means Defendant ITA Software, Inc., a Delaware
corporation headquartered in Cambridge, Massachusetts, and its
subsidiaries (whether partially or wholly owned), divisions, groups,
Affiliates, partnerships, and joint ventures, and their directors,
officers, managers, agents, and employees (but excluding in all cases
Google, as defined above.)
Z. ``Level 1 Query'' means a specific type of pricing and shopping
query, with the definition and input and output data definitions
specified in the InstaSearch POC Solution Document, which, when
submitted to the InstaSearch Service, returns certain cached results.
As explained in detail in the InstaSearch POC Solution Document, a
Level 1 Query will return data that enables the OTI to populate a map
showing to the user the best price to a range of destinations from a
particular origin over a particular range of dates.
AA. ``Level 2 Query'' means a specific type of pricing and shopping
query, with the definition and input and output data definitions
specified in the InstaSearch POC Solution Document, which, when
submitted to the InstaSearch Service, is passed through to QPX and is
not intended to return cached results. As explained in detail in the
InstaSearch POC Solution Document, a Level 2 Query narrows the result
set to the particular destination selected during the user's Level 1
Query, and returns the cheapest solution for a range of departure days
and stay lengths.
BB. ``Level 3 Query'' means a query submitted to the InstaSearch
Service other than a ``Level 1 Query'' or ``Level 2 Query.''
CC. ``Live Query,'' with respect to any OTI, has the definition set
forth in the QPX Agreement in effect between ITA and such OTI (or a
definition given therein for ``user query'').
DD. ``OTI,'' or online travel intermediary, means a Web site
offering (or proposing to offer) airfare search functionality to
consumers in the United States, other than a Web site owned or operated
by an airline. Provided, however, that in the case of an OTI that is a
line of business, business unit, subsidiary, or Affiliate of a company
that also has non-OTI lines of business, business units, subsidiaries
or Affiliates, the provisions in this Final Judgment that apply to OTIs
will only apply to that line of business, business unit, subsidiary or
Affiliate that offers airfare search services to consumers, and not to
lines of business, business units, subsidiaries or Affiliates that do
not offer airfare search services to consumers.
EE. ``OTI Confidential Information'' means confidential and
proprietary inventions, products, designs and ideas (including computer
software), functionality, concepts, processes, internal structure,
external elements, user interfaces, technology, and documentation
belonging to an OTI, OTI Configuration Information, as well as
confidential and proprietary information relating to the OTI's
operations, plans, opportunities, finances, research, technology,
developments, know-how, and personnel, that is disclosed to a Defendant
by an OTI pursuant to a QPX Agreement or an InstaSearch Agreement to
which such OTI is a party, except to the extent that such information
is Excluded Information.
FF. ``OTI Configuration Information'' means information related to
an OTI's configuration or tuning of QPX or the InstaSearch Service or
the parameters used by the OTI for particular types of queries.
GG. ``OTI Plan Information'' means confidential information related
to an OTI's current or future product or marketing plans that is
disclosed by such OTI to a Defendant pursuant to a QPX Agreement or
InstaSearch Agreement to which such OTI is a party, except to the
extent that such information is necessary to implement a feature or
features for the OTI or represents Excluded Information.
HH. ``QA Information'' means Query Information or other information
related to the performance, quality or accuracy of any software or
service provided by a Defendant in connection with a QPX Agreement or
InstaSearch Agreement, or one or more results generated by any such
software or service, including:
(1) Reports of bugs or defects;
(2) Information related to the success or failure of an attempt to
book or otherwise use a pricing and shopping solution provided by
Defendants;
(3) Information related to the existence of solutions which
potentially should have been, but were not, included in the results
provided by Defendants; and
(4) Information related to instances in which other sources of
information or
[[Page 21028]]
methods of calculation lead to a different fare than that calculated by
Defendants' products or services for a particular pricing and shopping
solution (without regard to the merits of the different calculations).
(5) QA Information may include OTI Configuration Information to the
extent that it is associated with a particular query, result, report or
request, provided that Defendants may not access the information in
order to separate OTI Configuration Information from the QA Information
as a whole, or to use the OTI Configuration Information for a purpose
prohibited by Section VI.
II. ``QPX'' means the airfare pricing and shopping engine and
Related Software deployed in production by ITA for Customers as of the
date of the Complaint herein (provided that nothing in this Final
Judgment shall confer any rights to use the Related Software other than
to the extent that such Related Software is used by QPX), together with
any enhancements, upgrades, updates, or bug fixes thereto that
Defendants must develop or license pursuant to Sections IV.E and IV.F
of this Final Judgment, whether or not licensed under the name QPX,
provided that in no event shall QPX include:
(1) Fare management capabilities that are part of ITA's Rule and
Fare Display System;
(2) Refund/reissue capability using Airline Tariff Publishing
Company (``ATPCO'') Category 31 and Category 33;
(3) Award travel or frequent flyer related functionality;
(4) InstaSearch in any form (including but not limited to that
comprised in the InstaSearch Proof of Concept or required to be
licensed pursuant to this Final Judgment), or any other technology
having substantially greater or different hardware requirements than
QPX as deployed in production by ITA for Customers (other than any
Excluded Software) as of the date of the Complaint herein that is not
otherwise required to be licensed pursuant to existing QPX Agreements
or the terms of this Final Judgment;
(5) Middleware or other applications that may be related to, but
are separate from, the base airfare pricing and shopping engine;
(6) Any Web site or consumer-facing interface, application or
technology, whether or not syndicated to multiple Web sites, including
but not limited to the Google Services;
(7) Any product, service, application, technology, feature, or
functionality not made available to Customers, whether or not derived
from or based upon QPX, including, but not limited to, any product,
service, application, technology, feature, or functionality that is
exclusively used in or by one or more Google Services; or
(8) Excluded Software.
JJ. ``QPX Agreement'' means an agreement, other than an InstaSearch
Agreement, between a Defendant and a Customer permitting the Customer
to submit queries to or otherwise use QPX, whether denominated as a
License Agreement, Services Agreement, or otherwise.
KK. ``Qualifying Complaint'' means a written complaint from an OTI
that (i) identifies the OTI on behalf of whom the complaint is
submitted; and (ii) alleges that Google is violating this Final
Judgment or acting, directly or indirectly, in an unfair manner in
connection with flight search advertising in the United States.
LL. ``Query Information'' means information related to the
execution and results of a particular query, including the query
submitted to such service, the results returned in response to such
query, operational data related to the execution of the query (e.g. the
particular server(s) on which it was executed, the time it was
received, the length of time needed to execute it, etc.), any
intermediate results or errors generated during the execution of the
query, and any information that is known or received regarding the
success or failure of the query for the Customer (e.g. bookability or
pricing errors in the results).
MM. ``Related Software'' means availability management and other
software operated by ITA in connection with the provision of pricing
and shopping results to Customers as of the date of the Complaint
herein.
NN. ``Reporting Period'' means the period beginning upon the entry
of this Final Judgment and expiring at the earlier of (i) five years
from the entry of the Final Judgment; or (ii) two years from the date
that Google launches a Google Consumer Flight Search Service.
OO. ``Similarly Situated OTIs'' means, with respect to any
particular OTI seeking to enter into a QPX Agreement or InstaSearch
Agreement, other OTIs having actual, reasonably expected (in terms of
the OTI's own projections of its expected volume), and/or minimum QPX
or InstaSearch query volumes (in the aggregate and as to specific types
of queries) and, for QPX Agreements, fee metrics (e.g. per-query, per-
ticket or per-Passenger Name Record (``PNR'')), that are similar to
those of such OTI (but excluding the OTI itself and its Affiliates).
This provision shall be interpreted broadly so as to avoid, where
reasonably possible, the situation where an OTI has no or few Similarly
Situated OTIs.
III. Applicability
This Final Judgment applies to Defendants, as defined above, and
all other persons in active concert or participation with any of them
who receive actual notice of this Final Judgment by personal service or
otherwise.
IV. Required Conduct
Licensing of QPX
A. Defendants shall honor the terms of all QPX Agreements in effect
as of the entry of this Final Judgment (including terms related to
customization and query tuning services for QPX), except and unless the
terms of this Final Judgment provide additional rights to, or eliminate
restrictions on, OTIs, in which case Defendants may not enforce such
terms against the OTI.
B. At the request of any OTI who is a party to a QPX Agreement as
of the entry of this Final Judgment, Defendants shall negotiate an
extension of such OTI's QPX Agreement for a term set at the reasonable
discretion of the OTI (but that shall be no less than one year and that
need not extend beyond five years from the entry of this Final
Judgment, provided that if such extension would commence more than four
years from the entry of this Final Judgment, its term shall expire five
years from the entry of this Final Judgment), on:
(1) Commercial terms (e.g. price, functionality, minimum query
volumes and permitted uses of QPX, as well as customization and query
tuning services for QPX) that are substantially similar to those
governing such OTI's use of QPX as of the entry of the Final Judgment,
and
(2) Other terms (e.g. audit rights, choice of law and
indemnification) that are fair, reasonable, and non-discriminatory.
(3) Notwithstanding anything in this paragraph, Defendants shall
not require an OTI to include in an extension any provision that
Defendants would be prohibited from requiring in a new QPX Agreement
pursuant to section IV.D of this Final Judgment, provided that, if an
OTI elects to remove such a provision from the extension, or requests
an extension with a different term than its QPX Agreement in effect as
of the entry of the Final Judgment, the commercial terms of such
extension shall be modified in a corresponding manner that is fair,
reasonable and non-discriminatory in light of the commercial terms of
QPX Agreements in effect between Defendants and
[[Page 21029]]
Similarly Situated OTIs as of or subsequent to the date of this Final
Judgment.
C. At the request of any OTI who is not party to a QPX Agreement,
or whose QPX Agreement will expire within one year of such request,
Defendants shall negotiate a QPX Agreement with such OTI for a term set
at the reasonable discretion of the OTI (but that shall be no less than
one year and that need not extend beyond the date that is five years
from the entry of this Final Judgment, provided that if such QPX
Agreement would commence more than four years from the entry of this
Final Judgment, its term shall expire five years from the entry of this
Final Judgment), on:
(1) Commercial terms (e.g. price, functionality, minimum query
volumes and permitted uses of QPX, as well as customization and query
tuning services for QPX) that are fair, reasonable and non-
discriminatory judged exclusively in relation to the OTI's chosen
contract term, desired fee metrics (e.g. per-query, per-ticket, or per-
PNR), reasonably expected query volume, the minimum query volume to be
included in such QPX Agreement, and the commercial terms of QPX
Agreements in effect between Defendants and Similarly Situated OTIs as
of or subsequent to the date of this Final Judgment, and
(2) Other terms (e.g. audit rights, choice of law, and
indemnification) that are fair, reasonable, and non-discriminatory.
D. Defendants may not require that a QPX Agreement entered into
pursuant to Section IV.B or Section IV.C of this Final Judgment prevent
the OTI from using alternative products to QPX sold by companies other
than Defendants. Defendants and the OTI may, however, enter an
exclusive QPX Agreement if Defendants offer the OTI a non-exclusive
agreement on fair, reasonable, and non-discriminatory terms.
E. All QPX Agreements with OTIs shall include the right to use
ordinary course upgrades to QPX that Defendants make available to
Customers without additional charge during the term of such QPX
Agreement. If Defendants make an ordinary course upgrade to QPX
available to Customers, but require the payment of an additional
charge, Defendants may condition the use of such upgrade pursuant to
this paragraph upon the payment of an equivalent charge, provided that
such charge is fair, reasonable, and non-discriminatory. Defendants
shall make available to OTIs the same version of QPX as they make
available to Customers, including but not limited to any version made
available to Airline Customers. This paragraph does not require
Defendants to make available to OTIs InstaSearch or any other product,
feature or technology excluded from the definition of QPX above,
including the Excluded Software.
F. Defendants shall, on an annual basis, devote substantially as
many (or more) engineering resources (in terms of budget and full-time-
equivalent employees) to the research and development and maintenance
of QPX and the InstaSearch Service (other than resources devoted to the
development of the InstaSearch Proof of Concept as required by
agreements entered into by ITA prior to the date of the Complaint
herein) for the use of Customers as ITA did in the average of the two
years prior to the filing of the Complaint herein (excluding resources
devoted by ITA to any aspect of its passenger service system,
reservations system, inventory system or Internet booking engine,
including but not limited to the integration of QPX into such system,
and resources devoted to the development of products or services that
are excluded from the definition of QPX in this Final Judgment,
including but not limited to ITA's InstaSearch). Defendants shall make
commercially reasonable efforts to respond to Customers' requests for
development of QPX, consistent with ITA's past practice prior to the
date of the Complaint herein. Provided, however, that:
(1) If the amount of revenue derived by Defendants from third-party
licensing of QPX materially decreases during the term of the Final
Judgment, Defendants shall be permitted to make a corresponding
reduction in the amount of resources committed pursuant to this
paragraph, provided that Defendants shall obtain the consent of the
United States prior to making such reduction, which consent shall not
be unreasonably withheld or delayed; and
(2) The degree to which particular efforts benefit Defendants or
Google Services shall not be considered in evaluating whether such
efforts qualify as ``research and development and maintenance of QPX
for the use of Customers,'' so long as those efforts are legitimately
beneficial to Customers and not solely beneficial to Defendants or
Google Services.
G. Nothing in this Final Judgment shall require Defendants to
provide to any third party any product, service, or technology (or
feature thereof) that Defendants develop exclusively for use in the
Google Services, nor shall any such product, service, or technology, or
the relative functionality of one or more Google Services (including,
but not limited to, the Google Consumer Flight Search Service) when
compared to third-party Web sites using QPX, be considered in
determining Defendants' compliance with any provision of this Final
Judgment.
(1) Licensing of InstaSearch
H. At the request of any OTI, Defendants shall negotiate an
InstaSearch Agreement with such OTI for a term set at the reasonable
discretion of the OTI (but that shall be no less than one year and that
need not extend beyond five years from the entry of this Final
Judgment, provided that if such InstaSearch Agreement would commence
more than four years from the entry of this Final Judgment, its term
shall expire five years from the entry of this Final Judgment). Such
InstaSearch Agreement shall:
(1) Offer the OTI the same functionality as the InstaSearch Proof
of Concept, except that Defendants shall permit the OTI to increase the
number of markets covered and contemplated cache refresh rate beyond
that of the InstaSearch Proof of Concept, subject to the payment of
appropriate fees as set forth below (and such InstaSearch Agreement
shall expressly provide that Defendants shall have no obligation to
implement any other functionality);
(2) At Defendants' option, disclaim any representations,
warrantees, guarantees, or service level agreements as to the
performance of the InstaSearch Service, or its fitness for any use,
notwithstanding any statements to the contrary made by ITA in
connection with the InstaSearch Proof of Concept, including but not
limited to in the InstaSearch POC Solution Document, provided that if,
during the term of such QPX Agreement, Defendants make any
representations, warrantees, guarantees or service level agreements to
any Customers as to the performance of the InstaSearch Service,
Defendants shall offer the same representations, warrantees, guarantees
or service level agreements to OTIs with equivalent projected usage of
the InstaSearch Service (including the number and types of markets to
be covered, refresh rate, provisioned hardware and total expected
volume), subject to such OTI agreeing to pay a fair, reasonable and
non-discriminatory fee for the receipt of such representation,
warrantee, guarantee or service level agreement, which may differ from
the pricing structure and limits set forth in Section IV.H.4 below.
(3) Provide that Defendants shall have no obligation to improve the
InstaSearch Service, except that:
(a) If during the term of such InstaSearch Agreement, Defendants
provide their Customers, including
[[Page 21030]]
solely Airline Customers, an implementation of InstaSearch with greater
functionality than the InstaSearch Service described herein without
requiring them to pay an additional charge (other than in Excluded
Software), Defendants shall make reasonable commercial efforts to also
make such improved version available to the OTI pursuant to its
InstaSearch Agreement (recognizing that not all implementations will be
suitable for all types of Customers even after the use of reasonable
commercial efforts), under the same pricing terms provided for in such
InstaSearch Agreement; and
(b) If Defendants require its Customers, including its Airline
Customers, to pay an additional fee to obtain an upgrade which can be
provided to OTIs with reasonable commercial efforts, Defendants shall
offer the upgrade to OTIs with an InstaSearch Agreement, but may
condition availability of the upgrade on payment of a fair, reasonable,
and non-discriminatory charge (which may differ from the pricing
structure and limits set forth in Section IV.H.4 below);
(4) Obligate the OTI to:
(a) Provision with Defendants a number of EUs for its InstaSearch
Service that, in Defendants' discretion, which shall be applied in a
fair, reasonable, and non-discriminatory manner, is reasonable given
the OTI's intended covered markets and refresh rate, and to pay a
monthly per-EU fee for each EU so provisioned (including any EUs used
for computing, storing, managing or retrieving cached results) equal to
the lesser of (i) for OTIs with a QPX Agreement in effect, the per-EU
fee set forth in such QPX Agreement (giving effect to all volume
discounts and aggregating EUs provisioned for InstaSearch with those
provisioned for other purposes, including, but not limited to, QPX.);
or (ii) a per-EU fee that is fair, reasonable, and non-discriminatory
solely in light of the EU fees charged by Defendants to Similarly
Situated OTIs in QPX Agreements then in effect.
(b) Pay a fair, reasonable and non-discriminatory per-query fee for
each Level 1 and Level 2 Query it submits to the InstaSearch Service
that shall be (i) greater than the effective per-query fee paid by such
OTI for Database Queries (or, if no such rate exists, an amount that is
fair, reasonable, and non-discriminatory in light of the effective per-
query fees then charged by Defendants to Similarly Situated OTIs for
Database Queries), and (ii) less than the effective per-query fee paid
by such OTI for Live Queries (or, if no such rate exists, an amount
that is fair, reasonable, and non-discriminatory in light of the
effective per-query fees then charged by Defendants to Similarly
Situated OTIs for Live Queries); and
(c) Pay a per-query fee for each Level 3 Query it submits equal to
the effective per-query fee paid by such OTI for Live Queries (or, if
no such rate exists, an amount that is fair, reasonable, and non-
discriminatory in light of the effective per-query fees then charged by
Defendants to Similarly Situated OTIs for Live Queries).
I. Defendants shall make commercially reasonable efforts to ensure
that the InstaSearch Service conforms to the technical specifications
set forth in the InstaSearch POC Solution Document, but it is
specifically understood that, other than as set forth in any
representations, warrantees, guarantees or service level agreements
that Defendants are otherwise required to make pursuant to this Final
Judgment, or that Defendants make in any particular InstaSearch
Agreement, Defendants make no representation, either to the United
States, the Court or to any Customer that the InstaSearch Service will
prove commercially useful for any Customer.
J. Nothing in this Final Judgment shall be deemed to require
Defendants to permit an OTI to host any portion of the InstaSearch
Service, or the EUs used for such service, on the OTI's own hardware,
notwithstanding any provisions of such OTI's QPX Agreement.
K. Arbitration
L. Defendants shall negotiate in good faith with any OTI seeking a
QPX Agreement or an InstaSearch Agreement pursuant to this Final
Judgment (including, but not limited to, existing licensees seeking to
renew their agreements). If Defendants and the OTI are unable to reach
agreement on the amount to be charged for any type of query pursuant to
Sections IV.B.1, IV.C.1, or IV.H.4 of this Final Judgment, Defendants
shall submit the matter to binding arbitration under the following
conditions:
(1) Prior to submitting any matter to arbitration, Defendants and
the OTI shall each designate a contact having the proper authorization
to resolve the dispute in a final and binding fashion, who shall meet
in person or by telephone for a period of 30 days (or such other period
of time as Google and the OTI shall mutually agree) in an attempt to
resolve the dispute. The contact for Defendants shall be Google's
General Counsel or his or her designee.
(2) No arbitration shall be commenced unless the OTI (i) has
certified to the United States that it negotiated in good faith,
including participation in the resolution procedure described in the
preceding paragraph; and (ii) has obtained the consent of the United
States, in its sole discretion, to initiate arbitration.
(3) Arbitration pursuant to this Final Judgment shall be conducted
in accordance with the AAA's Commercial Arbitration Rules and Expedited
Procedures, except where inconsistent with specific procedures
prescribed by this Final Judgment. As described below in Section
IV.J.12, the arbitrator shall select the Final Offer of either the OTI
or the Defendants and may not alter, or request or demand alteration
of, any terms of those Final Offers. The decision of the arbitrator
shall be binding on the parties as to the matters properly submitted to
arbitration pursuant to this Final Judgment, and Defendants shall abide
by the arbitrator's decision by offering an executable QPX Agreement or
InstaSearch Agreement (as appropriate) to the OTI incorporating the
pricing terms selected by the arbitrator.
(4) Defendants and an OTI may, by agreement, modify any time
periods specified in this Section IV.J.
(5) Upon obtaining the consent of the United States to initiate
arbitration, the OTI may commence arbitration by filing with the AAA
and furnishing to the AAA and the United States its Final Offer. Within
five business days of the commencement of an arbitration, Defendants
shall file with the AAA and furnish to the United States their Final
Offer. After the AAA has received Final Offers from the OTI and
Defendants, it will immediately furnish a copy of each Final Offer to
the other party.
(6) Within five business days of the commencement of an
arbitration, the OTI and the Defendants each shall furnish a legally
binding writing to the other and to the United States committing to
maintain the confidentiality of the arbitration and of any Final Offers
and discovery materials exchanged during the arbitration, and to limit
the use of any Final Offers and discovery materials to the arbitration.
The writing shall expressly state that all records of the arbitration
and any discovery materials may be disclosed to the United States.
(7) At any time after the commencement of arbitration, the OTI and
Defendants may agree to suspend the arbitration, for periods not to
exceed 14 days in the aggregate, to attempt to resolve their dispute
through negotiation. The OTI and the Defendants shall effectuate such
suspension through a joint writing filed
[[Page 21031]]
with the AAA and furnished to the United States. Either the OTI or the
Defendants may terminate the suspension at any time by filing with the
AAA and furnishing to the United States a writing calling for the
arbitration to resume.
(8) The AAA, in consultation with the United States, shall assemble
a list of potential arbitrators, to be furnished to the OTI and
Defendants as soon as practicable after commencement of the
arbitration. Such potential arbitrators shall, to the greatest extent
possible, be individuals familiar with the travel industry as well as
this Final Judgment. Within five business days after receipt of this
list, the OTI and Defendants each may submit to the AAA the names of up
to 20 percent of the persons on the list to be excluded from
consideration, and shall rank the remaining arbitrators in their orders
of preference. The AAA, in consultation with the United States, will
appoint as arbitrator the candidate with the highest ranking who is not
excluded by the OTI or Defendants.
(9) The OTI and the Defendants shall exchange written discovery
requests within five business days of receiving the other party's Final
Offer, and shall exercise reasonable diligence to respond within 14
days. Discovery shall be limited to the following items in the
possession of the parties: (i) previous agreements between the OTI and
the Defendants; (ii) current and prior QPX Agreements and agreements
relating to InstaSearch between the Defendants and other OTIs; and
(iii) records of past arbitrations pursuant to this Final Judgment.
(10) The scope of the arbitration shall be limited to the
determination of a fair, reasonable and non-discriminatory fee to be
charged for each type of query in dispute, judged exclusively in light
of the following factors:
(a) The OTI's actual or reasonably expected query volume;
(b) The minimum query volume to be required in the QPX Agreement or
InstaSearch Agreement for such query type;
(c) The amounts charged for such queries to Similarly Situated OTIs
pursuant to QPX Agreements in effect between Defendants and such OTIs,
as appropriately adjusted for the change in the Consumer Price Index,
for all Urban Consumers, Subgroup ``All Items'', U.S. City Average, for
(base Year 1982-84=100) subsequent to the date of such agreements; and
(d) if applicable, the nature and extent of any representations,
warrantees, guarantees or service level agreements offered to such OTI.
(11) In reaching his or her decision, the arbitrator may consider
only documents exchanged in discovery between the parties, testimony
explaining the documents and the parties' Final Offers, and briefs
submitted and arguments made by counsel.
(12) Arbitrations under this Final Judgment shall begin within 30
days of the AAA furnishing to the OTI and to the Defendants, pursuant
to Section IV.J.5, each party's Final Offer. The arbitration hearing
shall last no longer than ten business days, after which the arbitrator
shall have five business days to inform the OTI and the Defendants
which Final Offer best reflects fair, reasonable, and non-
discriminatory terms under this Final Judgment.
(13) The Arbitrator shall have no authority to consider or
determine Defendants' compliance with the terms of this Final Judgment
or with any other agreement, or to determine the reasonableness of any
provision of a proposed or negotiated QPX Agreement or InstaSearch
Agreement other than those for which arbitration was specifically
provided for above.
(14) Any Arbitrator's fees and any costs payable to the Arbitrator
shall be shared equally by the parties to the arbitration. Each party
to the arbitration shall bear its own legal fees and expenses.
M. Nothing in Section IV.K shall prevent Defendants from agreeing
with an OTI (i) on fees or other terms that are more favorable to the
OTI than those required by this Final Judgment, (ii) to withdraw a
matter from arbitration prior to decision; or (iii) to supersede a
previously arbitrated rate as a part of a freely negotiated contract or
amendment.
N. Nothing in Section IV.K shall limit the ability of the United
States to enforce this Final Judgment in Court, including as to matters
covered by an existing or potential arbitration proceeding.
O. Required Disclosures
P. Google shall, throughout the Reporting Period, make available a
Web page at http://itaqualifyingcomplaint.com which shall contain a Web
form permitting OTIs to submit Qualifying Complaints, as well as a link
to this Final Judgment, and shall, on a semiannual basis during the
Reporting Period, furnish copies of any Qualifying Complaints received
via such form to the Department of Justice.
Q. To the extent that, during the Reporting Period, an attorney
employed by Google's Legal Department (or an outside attorney retained
by Google and acting at the direction of Google's Legal Department)
communicates with an OTI with respect to a written complaint that the
Google attorney reasonably believes would, if submitted as set forth in
the preceding paragraph, be a Qualifying Complaint, such attorney shall
take reasonable steps to ensure that the OTI is informed of its right
to submit a Qualifying Complaint and the Web address at which it can do
so.
V. Additional Provisions
A. Defendants shall not enter into any agreement with an airline
that restricts that airline's right to share any Availability
Information with parties other than Defendants, provided that this
paragraph shall cease to apply to any type of Availability Information
(regardless of source) if one or more airlines enters into an agreement
with one or more of Defendants' competitors (either in the provision of
airfare pricing and shopping services or in the provision of OTI
services) that restricts that airline's right to share such
Availability Information with parties other than such competitor(s).
B. To the extent that Defendants obtain Availability Information
from any airline for use as an input to an airfare pricing and shopping
engine used by the Google Consumer Flight Search Service, Defendants
shall also incorporate such Availability Information into QPX results
generated for all OTIs who are party to a QPX Agreement, unless the
airline explicitly and unilaterally restricts the use of such
Availability Information by or for one or more OTIs. Defendants shall
not provide any incentive to an airline to restrict the use of
Availability Information by another OTI.
C. Notwithstanding the foregoing, nothing in this Final Judgment
shall (i) restrict Defendants' right to enter into agreements by which
they become an authoritative source of an airline's Availability
Information for third parties (including, but not limited to,
agreements to provide passenger service systems, reservations systems,
availability hubs or similar systems); or (ii) be deemed to prohibit
Defendants from obtaining access to or using Availability Information
merely because the providing airline has not provided it to any party
other than Defendants, so long as the airline retains the right to
provide such Availability Information to another party at any time, in
its unilateral discretion.
D. Defendants shall not condition the provision of QPX or the
InstaSearch Service on whether or how much an OTI spends on other
products or services sold by Google.
[[Page 21032]]
E. Nothing in this Final Judgment shall be deemed to alter, in any
way, the terms of any agreement Defendants may have with any customer
related to any product or service other than QPX or the InstaSearch
Service.
VI. Firewall
A. No Covered Employee shall access any OTI Configuration
Information or any OTI Plan Information, except to the extent such
information constitutes or is included within QA Information, or with
the written consent of the OTI concerned.
B. Defendants shall not use OTI Confidential Information for any
purpose other than:
(1) In connection with the marketing, sale, or provision of any
product or service to such OTI (or, with the consent of such OTI, its
Affiliates);
(2) In connection with billing, invoicing, financial reporting,
financial or capacity forecasting, compensation, audit, legal,
compliance, or similar administrative or financial purposes;
(3) In connection with the development, maintenance and improvement
of QPX and the InstaSearch Service, in accord with ITA's past practices
prior to agreeing to be acquired by Google; or
(4) As permitted by such OTI in writing.
C. Notwithstanding anything in this Final Judgment, Defendants
shall be permitted to access and use QA Information in connection with
the development, maintenance and improvement of Defendants' airfare
pricing and shopping engines (including those not made available to any
Customers), provided that Defendants shall not extract any customer
identifiable OTI Configuration Information or use any OTI Configuration
Information for the purpose of changing, improving or comparing the
Google Consumer Flight Search Service's use of any airfare pricing and
shopping engine.
D. Defendants shall implement reasonable procedures to prevent OTI
Confidential Information from being used or accessed by employees other
than those having a legitimate need for such information in connection
with the permitted uses of such information set forth in this Section
VI. Nothing in this Final Judgment shall restrict Defendants' right to
assign any employee to any job responsibility, or otherwise to restrict
the ability of employees who have previously had access to or used OTI
Confidential Information in the course of prior job responsibilities
from subsequently assuming additional or different responsibilities for
Defendants, provided that such employees shall not use OTI Confidential
Information for any purpose other than as permitted by this Final
Judgment. An employee shall not be deemed to have ``used'' OTI
Confidential Information solely on account of his or her prior access
to OTI Confidential Information, absent evidence of intentional
reliance on information other than information that is retained in the
unaided memory of such employee (provided that memory is ``unaided'' if
the employee has not intentionally memorized the information for the
purpose of retaining and subsequently using or disclosing it) or an
affirmative intention to violate or evade the terms of this Final
Judgment. Defendants shall, upon the reasonable request of the United
States, provide the United States with a list of employees who have had
access to or used OTI Confidential Information at any point after the
filing of the complaint in this matter who also have job
responsibilities in addition to those set forth in Section VI.B, above.
E. Defendants shall, within thirty (30) calendar days of the entry
of the Stipulation and Order, submit to the Department of Justice a
document setting forth in detail the procedures implemented to effect
compliance with Sections VI.A, VI.B, and VI.C of this Final Judgment.
The Department of Justice shall notify Defendants within ten (10)
business days whether it approves of or rejects Defendants' compliance
plan, in its sole discretion. In the event that Defendants' compliance
plan is rejected, the reasons for the rejection shall be provided to
Defendants and Defendants shall be given the opportunity to submit,
within ten (10) business days of receiving the notice of rejection, a
revised compliance plan. If the parties cannot agree on a compliance
plan, the United States shall have the right to request that the Court
rule on whether Defendants proposed compliance plan is reasonable.
F. Defendants may at any time submit to the United States evidence
relating to the actual operation of the firewall in support of a
request to modify the firewall set forth in Section VI. In determining
whether it would be appropriate for the United States to consent to
modify the firewall, the United States, in its sole discretion, shall
consider the need to protect OTI Confidential Information and the
impact the firewall has had on Defendants' ability to efficiently
support OTIs and the Google Consumer Flight Search Service.
VII. Compliance Inspection
A. For purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time duly authorized representatives of the Department of
Justice, including consultants and other persons retained by the
Department of Justice, shall, upon written request of an authorized
representative of the Assistant Attorney General in charge of the
Antitrust Division, and on reasonable notice to Defendants, be
permitted
(1) Access during the Defendants' office hours to inspect and copy,
or at the option of the United States, to require Defendants to provide
to the United States hard copy or electronic copies of, all books,
ledgers, accounts, records, data, and documents in the possession,
custody, or control of Defendants, relating to any matters contained in
this Final Judgment; and
(2) To interview, either informally or on the record, the
Defendants' officers, employees, or agents, who may have their
individual counsel present, regarding such matters. The interviews
shall be subject to the reasonable convenience of the interviewee and
without restraint or interference by Defendants.
B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
Defendants shall submit written reports or respond to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested. Written
reports authorized under this paragraph may, at the sole discretion of
the United States, require Defendants to conduct, at their cost, an
independent audit or analysis relating to any of the matters contained
in this Final Judgment.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
D. If at the time information or documents are furnished by a
Defendant to the United States, the Defendant represents and identifies
in writing the material in any such information or documents to which a
claim of
[[Page 21033]]
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules
of Civil Procedure, and the Defendant marks each pertinent page of such
material, ``Subject to claim of protection under Rule 26(c)(1)(G) of
the Federal Rules of Civil Procedure,'' then the United States shall
give the Defendants ten (10) calendar days notice prior to divulging
such material in any legal proceeding (other than a grand jury
proceeding). The United States will provide such notice electronically
to an individual designated by Google to receive such notices.
VIII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
IX. Expiration of Final Judgment
Unless modified by this Court, this Final Judgment shall expire
five years from the date of its entry.
X. Public Interest Determination
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16, including making copies available to the
public of this Final Judgment, the Competitive Impact Statement, and
any comments thereon and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this Final Judgment is in the public interest.
Court approval subject to procedures of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16.
United States District Judge.
[FR Doc. 2011-9020 Filed 4-13-11; 8:45 am]
BILLING CODE P