Antitrust Law Daily Wrap Up, ANTITRUST NEWS: U.S., Bazaarvoice dispute impact of acquisition in post-trial briefs, (Oct 30, 2013)

By Jeffrey May, J.D.

With the trial now wrapped up in the government’s challenge to Bazaarvoice, Inc.’s June 2012 acquisition of competitor PowerReviews, Inc., both sides have filed their post-trial briefs with the federal district court in San Francisco. In their October 29 filings, the parties have painted very different pictures of the impact that the $168.2 million acquisition has had on the disputed market for product ratings and reviews (PRR) platforms (U.S. v. Bazaarvoice Inc., Civ. C 13 0133).

The Department of Justice Antitrust Division filed its complaint against Bazaarvoice—the leading commercial supplier of PRR platforms in the United States—in January, seeking to unwind the company’s purchase of rival PowerReviews. The government alleged that the transaction substantially lessened competition in the market for PRR platforms in the United States. Retailers and manufacturers purchase PRR platforms to collect and display consumer reviews online.

A bench trial in the case began with opening statements on September 23 and wrapped up earlier this month. The trial moved forward despite the government shutdown after the court denied the Justice Department’s motion for a stay.

During the trial, the court heard testimony from company executives, including the chairman of Bazaarvoice and the former CEO of PowerReviews; customers; and expert witnesses, including Carl Shapiro, a former Deputy Assistant Attorney General for Economic Analysis at the Antitrust Division. The government also identified a number of internal company documents to refute Bazaarvoice’s contentions that the transaction was procompetitive.

In its post-trial brief, the Antitrust Division reiterated its position that the acquisition was presumptively unlawful, because it significantly increased market concentration in the highly concentrated PRR market, and that Bazaarvoice failed to present sufficient evidence of new entry or expansion in the market to rebut the government’s prima facie case. According to the government, competition from smaller PRR platform providers, such as Pluck, Gigya, and Viewpoints, has not and will not replace competition lost as a result of the acquisition. With respect to the testimony of a “skewed” sample of customers, the government cautioned that “the type of customer testimony Bazaarvoice seeks to emphasize in this case should be given little weight.” Bazaarvoice also failed to produce any credible and verifiable evidence of efficiency gains from the transaction, the government argued.

The competitive constraint that PowerReviews would have provided had it not been acquired has already been replaced, and the merger poses no threat to competition, Bazaarvoice argued in its brief. Bazaarvoice called the government’s case “a set of ‘hot’ documents in search of a legal theory.”

The company identifies three reasons for why the government’s case fails:

1. the evidence cannot support a finding of actual or probable post-merger harm to competition (no matter how the relevant market is defined or concentration measured);

2. any concern about prospective harm is negated by ease of entry and repositioning; and

3. the government did not even establish a prima facie case.

Citing “unanimous customer testimony” and “clear postmerger evidence,” the defendant urged the court to enter judgment against the government and in favor of Bazaarvoice.

Attorneys: Michael Domenic Bonanno for U.S. Department of Justice. Boris Feldman (Wilson Sonsini Goodrich and Rosati) for Bazaarvoice, Inc.

Companies: Bazaarvoice, Inc.

News: Antitrust AntitrustDivisionNews