Forced Separation: What Happens When DOJ Dissolves a Consummated Merger?
In January, the U.S. District Court for the Northern District of California found that Bazaarvoice’s acquisition of rival PowerReviews violated the Clayton Act. United States v. Bazaarvoice, Inc. The Department of Justice (DOJ) challenged the $168 million transaction, which had already been consummated, on the ground that it eliminated meaningful competition in the market for “rating and review” (R&R) platform services sold to internet retailers. For merging parties, this opinion reveals that no acquisition or merger is “too small” for the government to review. Second, a company’s internal documents will be used by the government as the best indicator of the parties’ views about competition. Third, customer support is essential to successfully defend a merger challenge, but that support may not be enough. Finally, parties in high-tech industries face an uphill battle in convincing courts that competition is different than in many traditional industries.