Bazaarvoice Shows Courts’ and Agencies’ Orthodox Approach to Mergers in High-Tech Markets

The District Court’s decision finding the Bazaarvoice/PowerReviews acquisition unlawful demonstrates that agencies and courts will continue to apply traditional methods of merger analysis based on market definition and market concentration even when customers have not opposed the transaction and the overlapping revenues involved appear to be small. The Court rejected claims that Google, Amazon, Facebook and other e-Commerce giants were competitive constraints and placed particular weight on the parties’ internal documents, once again showing how difficult it can be for merging parties to impeach their own unhelpful documents.

Factual Background and Prior History -

On Wednesday, the US District Court for the Northern District of California found that Bazaarvoice’s June 12, 2012 acquisition of PowerReviews violated Section 7 of the Clayton Act, which prohibits any merger that may substantially lessen competition. Prior to the acquisition, Bazaarvoice and PowerReviews had been the two leaders in the US for “Ratings and Reviews” (“R&R”) software and services, which allow product manufacturers and Internet retailers to solicit, moderate and display customer feedback at the online “point of sale.” The elimination of PowerReviews, the District Court found, had left Bazaarvoice as an effective monopolist, with results likely to cause lasting harm to consumers in terms of both price and innovation.

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