DOJ Successfully Challenges Non-HSR Reportable Bazaarvoice Merger

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On January 8, 2014, the U.S. District Court for the Northern District of California held that Bazaarvoice, Inc.’s $168 million acquisition of PowerReviews violated Section 7 of the Clayton Act. Section 7 prohibits mergers whose effect “may be substantially to lessen competition, or to tend to create a monopoly.” To establish a Section 7 violation, the government need only show that there is a “reasonable likelihood” that the transaction will have anticompetitive effects. The court’s ruling followed a three-week trial that began on September 23, 2013.

Bazaarvoice, a social media marketing company, provides ratings and review platforms that allow online retailers to organize and display their customers’ product reviews. In June 2012, Bazaarvoice acquired PowerReviews in a transaction that did not trigger reporting requirements under the Hart-Scott Rodino (“HSR”) Antitrust Improvements Act. Two days after the transaction was consummated, the Department of Justice, Antitrust Division (DOJ) launched an investigation and later filed a civil suit on January 10, 2013. In its complaint, the DOJ alleged that Bazaarvoice had acquired PowerReviews to eliminate its most significant competitive threat and to stem price competition, in violation of Section 7. As part of the relief sought, the DOJ requested that the court order divestitures of assets from the transaction consummated months earlier that would be “sufficient to create a separate, distinct, and viable competing business that can replace PowerReviews’ competitive significance in the marketplace.”

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