US regulator wins lawsuit challenging merger of Bazaarvoice Inc and PowerReviews Inc
US District Judge William H. Orrick ruled that the US Justice Department could challenge the $168 million acquisition of PowerReviews Inc by its competitor Bazaarvoice Inc, Bloomberg reported. Both companies are online product review software makers.
According to the regulator, the deal entered by both firms in 2012 would thwart competition in the product ratings and review software market and subsequently lead to more expensive prices for retailers and manufacturers that utilize the product. Some of the customers of Bazaarvoice are Best Buy Co, Costco Wholesale Corp and Crate & Barrel, the report said.
Antitrust attorneys of the Justice Department claimed in a nonjury trial held in San Francisco in October that executives of Bazaarvoice looked to weaken competition and then increase prices when it sought the purchase of PowerReviews. The government said a lot of the customers of the Austin, Texas-based firm contended with higher prices when the merger was finished.
In his ruling, US District Judge William H. Orrick wrote, "Bazaarvoice and PowerReviews each asserted that the merged firm could increase prices post-merger. Someone with 100 percent of the market could do so even more profitably." The judge said that the government was able to prove that the acquisition tended to form a monopoly and Bazaarvoice was not able to rebut the government's allegations.
Orrick said that while the government is allowed an injunction that would require Bazaarvoice to sell PowerReviews, this is not a simple proposition 18 months after the merger was completed. He has set a meeting on January 22 to talk about possible solutions.
Lawyers of Bazaarvoice, meanwhile, contended that the merger did not threaten competition since businesses can make their own ratings and reviews systems. They can also purchase software from other rivals.
In a statement, Assistant Attorney General Bill Baer who is in charge of the antitrust division said, "As shown during trial, Bazaarvoice executives clearly intended to eliminate competition by acquiring PowerReviews."
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