Bazaarvoice 2012 Merger Ruled Anticompetitive

In the US, a federal judge has ruled that Bazaarvoice's acquisition of PowerReviews, 'its only real commercial competitor', violated antitrust laws.

Austin, TX-based social media analytics specialist Bazaarvoice announced more than eighteen months ago it would be acquiring San Francisco-based ratings and reviews service PowerReviews, for around $152m in cash and stock. Sources suggest the final figure was around $168m.

Summing up a 140-page decision, Northern District of California Judge William H. Orrick III said the evidence that the two companies 'expected the transaction to have anticompetitive effects' was 'overwhelming'. The investigation began six months after the acquisition, for which Bazaarvoice did not seek regulatory approval up-front.

Bazaarvoice President Gene Austin said in a statement that the ruling was disappointing, affirming that 'We believe that the merger with PowerReviews has been beneficial to customers.' Before deciding whether and how to appeal, the company will await a hearing later this month at which Orrick will decide what sorts of sanctions to impose. While the Department of Justice, prosecuting, had requested that he order divestments to be made to help establish a viable competitor, the judge said that eighteen months on from the merger it may not be easy to divest assets.

The company's defence included the arguments that its competition included a much broader range of companies, including the likes of Facebook and Twitter - Orrick disagreed that these were really competitors; and that none of 104 customers who were deposed for the trial complained that the merger has hurt them - Orrick considered that it would be 'a mistake to rely on customer testimony' for a number of reasons including customers' 'idiosyncratic understanding' of the market and individual perspective - and said that Bazaarvoice's behavior (and the lack of a price rise since the merger) had probably been influenced by the knowledge that the investigation was underway.

Founded in 2005, Bazaarvoice is online at www.bazaarvoice.com . A public document with the court's opinion is online here: www.justice.gov/atr/cases/f302900/302948.pdf .