A few years back such a pairing wouldn't have made it past the front steps of the Federal Trade Commission. But that was before Amazon, Wal-Mart, Costco and Target became serious players in the book biz. Now it's considered at least plausible enough for the Barnes & Noble folks to give it some thought (Borders put itself up for sale in March). Of course, B&N has its own troubles - namely, a first-quarter net loss of $2.2 million (it cites the "overall retail environment"). And there’s no shortage of interested parties in Borders. Still, a possible B&N-Borders combo has gotten the most attention. Business Week's Aaron Pressman lays out the possibilities.

"There may be a lot of complaining but at the end of the day, it's highly unlikely it would be enough to block it," says Michael McFalls, an attorney at Jones Day in Washington, D.C., who worked at the Federal Trade Commission from 1997 to 2000. Of course, if the FTC turned up damning e-mails or other troubling evidence, all bets would be off, he says. The commission tried to block Whole Foods Market's (WFMI) deal to buy Wild Oats, for example, after finding statements from Whole Foods' CEO about avoiding "nasty price wars." A federal court eventually let the deal go through.

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Antitrust regulators will look closely at the effects, if any, that Borders stores have on prices and service at nearby Barnes & Noble stores. When Staples (SPLS) sought to buy competitor Office Depot (ODP) in 1997, the Federal Trade Commission discovered that Staples charged lower prices at outlets near Office Depot stores. But when Federated Department Stores (M) sought to buy May Department Stores, the FTC approved, concluding that department stores essentially operated in a national market without regard for the proximity of competing chains.

By the way, B&N has agreed to settle its long-standing dispute with the state of California regarding the collection of taxes on sales made by Barnes & Noble.com from 1999 to 2005.