Bazaarvoice Inc., the software company that acquired its closest rival PowerReviews Inc. last year in a $168.2 million deal, was sued by the U.S. to require it to divest some of its assets to create a competitor.
The U.S. Justice Department said in a complaint filed today in federal court in San Francisco that the takeover hurt competition in the market for Internet platforms that offer product ratings and reviews.
“Without competitive pressure from PowerReviews, Bazaarvoice will be able to increase prices to retailers and manufacturers for its product ratings and reviews platform,” Bill Baer, assistant attorney general in charge of the Justice Department’s Antitrust Division, said in a statement.
Bazaarvoice, based in Austin, Texas, helps companies insert reviews and other customer-generated information on their websites. The transaction, which closed in June, hadn’t been reported to regulators under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the Justice Department said in the statement.
“Transactions that are not reported to us are not immune from scrutiny,” Baer said.
The Justice Department is seeking a court order to force Bazaarvoice to divest enough assets to create a competitor that could replace PowerReviews.
“We provided the DOJ with extensive documents, data, and information demonstrating that our acquisition of PowerReviews was pro-competitive and did not result in a lessening of competition,” Matt Krebsbach, a Bazaarvoice spokesman, said in an e-mailed statement. “We disagree with the DOJ’s decision to ignore that evidence and we will now shift our attention to a court of law where we expect to be fully vindicated.”
Before the transaction, PowerReviews was an aggressive price competitor, enabling retailers and manufacturers to often receive discounts as a result of the competition between the two companies, the Justice Department said.
The case is U.S. v Bazaarvoice Inc., 13-cv-00133, U.S. District Court, Northern District of California (San Francisco).