On January 10, 2013, the U.S. Department of Justice filed a complaint against Bazaarvoice, Inc. in the United States District Court for the Northern District of California, challenging Bazaarvoice’s acquisition of PowerReviews, Inc. for a purchase price of approximately $168.2 million. Bazaarvoice is a technology company that helps retailers collect online customer reviews and product ratings and PowerReviews was its closest competitor. The DOJ argued that as a result of the acquisition, Bazaarvoice eliminated its most significant rival and effectively insulated itself from meaningful competition. The DOJ listed certain anticompetitive effects that resulted from the acquisition, including the reduction of Bazaarvoice’s incentives to discount prices, to increase quality of its services or to invest in innovation and the likely increase in price for such services. The DOJ argued that the anticompetitive effects will not be counteracted by merger-specific efficiencies.
The DOJ asked the Court to order Bazaarvoice to divest assets sufficient to create a separate, distinct and viable competing business that can replace PowerReview’s competitive significance in the marketplace. Two notable facts in this case are the date when the acquisition at issue closed, in June 2012, and the relatively small size of the acquisition and the seller, which had approximately $11.5 million in revenue in 2011. As seen in this case, it is important to note that the DOJ’s inquiries expand to transactions that are already consummated and also to transactions involving relatively small parties even though such transaction need not be reported to the Federal Trade Commission under the Hart-Scott-Rodino Act. Here, no HSR filing was required because the parties did not meet the “size of the person” test.
United States v. Bazaarvoice, Inc., Case No. C-13-0133-JSC (N.D. Cal. Jan. 10, 2013)