The U.S. Department of Justice has voiced strong opposition to the granting of broad antitrust immunity to Continental Airlines Inc. (CAL) and nine members of the Star Alliance group of carriers.

The department rejected the airlines' pursuit of global immunity from antitrust laws in favor of backing more limited cooperation on transatlantic routes, and also expressed concern about the domestic "spillover" of closer ties between Continental and United Airlines, a unit of UAL Corp. (UAUA).

The move, revealed in a filing with the U.S. Department of Transportation department late Friday, could have wide-ranging implications for competition policy in the global airline industry, and reflects the tougher stance on antitrust enforcement pledged by the Obama administration.

DOT had already granted tentative approval to much of the application from Star members, but the toughly-worded rejoinder from the justice department reflects what some observers view as tensions between the agencies.

Aside from Star members, the 58-page submission could also force a rethink of a separate application for immunity by members of the rival Oneworld alliance, led by the British Airways PLC (BAY.LN) and American Airlines, a unit of AMR Corp. (AMR).

DOJ said it was unconvinced that many of the claimed benefits from immunized alliances could not be achieved through more traditional cooperation.

It could also spill into the already slow progress in launching talks between the U.S. and the European Union on a second stage of their open-skies liberalization pact, due to start later this year.

Competition policy is expected to be a key part of the agenda. Continental is due to leave SkyTeam on Oct. 24, joining Star soon after, and had hoped to secure antitrust approval by late May.

DOJ said Star members' claims that they would not expand their alliance without immunity was "not credible". Oneworld members had hoped to secure immunity by year end.

The DOJ submission railed against much of the analysis and conclusions of the DOT's decision in April, and said the Star airlines and Continental had failed to demonstrate that antitrust immunity was necessary to produce the promised level of consumer benefits.

More damagingly, DOJ said granting expanded immunity to the alliance - which already enjoys some limited breathing room from competition laws - was "likely to result in harm" on many international routes, mainly in the form of higher fares.

It also cast a wary eye on planned deeper cooperation between United and Continental, which it warned may "pose harm" to competition on domestic routes. DOT had already toughened its oversight of the proposed tie-up between the third and fourth-largest U.S. carriers, which had pledged to keep domestic cooperation separate from their international alliance, but DOJ seemed unimpressed.

"Because the Applicants include two large, domestic competitors, a sweeping grant of immunity raises significant concerns about harm to domestic competition, a risk that cannot be completely mitigated through confidentiality guidelines," said DOJ in its submission, admitted after the official DOT deadline for responses.

DOJ pointed in particular to potential anti-competitive issues from cooperation between Continental and United on routes to Asia and Latin America, while expanded Star operations on a number of transatlantic routes and U.S.-Canada markets also raised concerns and objections.

SkyTeam, led by Delta Air Lines Inc. (DAL) and Air France-KLM and the third of the major alliance groupings that dominate the global airline industry alongside Star and Oneworld, already has comprehensive antitrust immunity on transatlantic routes.

Star and Oneworld had used securing parity with SkyTeam as part of their argument for immunity, but DOJ noted that antitrust approval had in the past been granted to help secure open-skies deals.

With open skies already in place with many nations and the European Union - or deemed as out of reach in the case of China and Brazil - DOT suggested antitrust approval was no longer a suitable means to achieve broader market liberalization.

The DOJ's toughening policy comes amid an ongoing probe by the European Commission into the consumer impact of granting immunity to existing and proposed alliances. Continental and Star members were not immediately available for comment.

-By Doug Cameron, Dow Jones Newswires; (312) 750 4135; doug.cameron@dowjones.com