The US Department of Justice (DoJ) layed the groundwork for litigation in case its antitrust arm chooses to sue to stop AT&T’s $85 billion merger with Time Warner, The Wall Street Journal (WSJ) reported.

Those preparations are being made as the DoJ works its way through settlement discussions with the two companies which would allow the deal to be approved with conditions. Talks between AT&T and US officials began in July, and reports surfaced in August indicating the pair were making headway. However, WSJ indicated the two sides “aren’t close to an agreement.”

AT&T brushed off the report, noting in a statement to Mobile World Live “it is common and expected for both sides to prepare for all possible scenarios,” during DoJ reviews.

An AT&T representative said vertical mergers like its proposed tie-up with Time Warner have been reliably approved over the past 40 years. While the operator wouldn’t comment specifically on its ongoing negotiations with the DoJ, the representative explained it sees “no reason in the law or the facts why this transaction should be an exception.”

In a research note, Wells Fargo analyst Jennifer Fritzsche reported her sources in Washington DC indicate preparing for litigation is more about boosting the DoJ’s negotiating leverage than a serious intent to block the deal.

Approval from US authorities is the only remaining obstacle to closing the deal. The transaction already received the green light from antitrust officials in Brazil, Chile, Mexico and the European Commission. Brazil’s regulators approved the deal in October with “targeted conditions” to address antitrust concerns, but those don’t include the divestiture of any AT&T or Time Warner assets.

In late October, AT&T extended its deadline to close the Time Warner deal “for a short period” to allow more time for US negotiations.