Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Antitrust Division announces agreement to remedy Bazaarvoice’s illegal acquisition of PowerReviews, (Apr 25, 2014)

By Linda O’Brien, J.D., LL.M.

The Department of Justice Antitrust Division and Bazaarvoice Inc. have agreed on a remedy that will address Bazaarvoice’s illegal acquisition of PowerReviews Inc. by requiring Bazaarvoice to divest the assets it acquired from PowerReviews and adhere to other requirements to fully restore competition in the provision of online product ratings and reviews platforms, the DOJ announced yesterday.

In January 2013, the department filed a civil antitrust complaint in the U.S. District Court for the Northern District of California in San Francisco against Bazaarvoice. The department challenged Bazaarvoice’s June 2012 acquisition of PowerReviews on the ground that it substantially lessened competition in the U.S. market for product ratings and reviews platforms (R&R platforms) for companies involved in online commerce. According to the department, the combination would drive up prices and diminish innovation in the R&R platform marketplace.

Bazaarvoice’s acquisition of PowerReviews was not required to be reported under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which requires companies to notify and provide information to the department and the Federal Trade Commission before consummating certain acquisitions. The department began its investigation shortly after the transaction closed.

In January 2014, the court ruled that Bazaarvoice violated Section 7 of the Clayton Act when it acquired PowerReviews, its only serious competitor. R&R platforms provide an interface for consumers to rate a product online. Some R&R platforms allow manufacturers to share ratings and reviews with their retail partners and to analyze information collected from R&R, among other features. Before the acquisition, Bazaarvoice and PowerReviews each offered sophisticated R&R platforms to large enterprise manufacturers and retailers with these added features, among others. According to the court, Bazaarvoice recognized that, by acquiring PowerReviews, it would eliminate its primary commercial competitor.

The proposed judgment requires Bazaarvoice to sell all of the PowerReviews assets to a divestiture buyer and contains other provisions to compensate for the deterioration of PowerReviews’ competitive position that occurred as a result of the transaction. Under the terms of the agreement, Bazaarvoice is required to provide syndication services to the divestiture buyer for four years, allowing the divestiture buyer to build its customer base and develop its own syndication network. Bazaarvoice is required to waive breach of contract claims against its customers, allowing them to switch to the divestiture buyer without penalty. Bazaarvoice is also required to waive trade-secret restrictions for any of its employees who are hired by the divestiture buyer, enabling the buyer to leverage Bazaarvoice’s post-merger research and development efforts.

Additionally, the agreement provides for the appointment of a trustee to oversee the divestiture process and to monitor Bazaarvoice’s compliance with its other obligations under the proposed remedy.

"As a result of today’s agreement, Bazaarvoice will remedy the harm caused by its unlawful acquisition of PowerReviews," said Bill Baer, Assistant Attorney General in charge of the Department of Justice Antitrust Division. "In addition, Bazaarvoice has agreed to meaningful additional measures that will allow a divestiture buyer to quickly achieve the competitive position that PowerReviews would have occupied today, absent the unlawful transaction."

News: Antitrust AntitrustDivisionNews