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Matthew Joseph, Barry Nigro, Mar 13, 2014
Two days after Bazaarvoice acquired its rival, PowerReviews, for $168.2 million, the Department of Justice initiated an investigation into the acquisition’s competitive effects. Eighteen months later, Judge William Orrick of the Northern District of California held that the acquisition was unlawful because it eliminated Bazaarvoice’s “only credible competitor.” Judge Orrick found that within the “highly concentrated” ratings and reviews market, the two-to-one merger would have anticompetitive effects, including higher prices and diminished innovation.
What lessons should we take from Bazaarvoice? First, the antitrust agencies continue aggressively to enforce Section 7 of the Clayton Act against mergers of all sizes, including consummated mergers not reportable under the Hart-Scott-Rodino Act. Second, the role of customer opinions, at least in court, is not outcome determinative. Third, even in high-technology markets, when there is evidence of anticompetitive effects in one market, courts are reluctant to ignore those effects in favor of offsetting pro-competitive benefits in a separate market. Finally, “hot” documents, especially when supported by economic experts, continue to rule the day.