The newly released annual look at the digital world from online and mobile measurement firm comScore makes it quite clear that retailers better be ...
The U.S. says Bazaarvoice acquired its rival to prevent price competition.
Last year’s acquisition of ratings-and-review technology provider PowerReviews Inc. by competitor Bazaarvoice Inc. resulted in higher prices and reduced competition, the U.S. Department of Justice claims in an antitrust lawsuit filed this week. The department wants Bazaarvoice to divest assets that would enable the creation of a new ratings-and-reviews competitor.
The $168.2 million transaction in June combined the two leading providers of technology that lets consumers review products online. According to the latest data collected by Internet Retailer, Bazaarvoice serves 159 of the retailers in the Top 500 Guide; PowerReviews, 80. In the Second 500 Guide, 11 retailers list Barzaarvoice, while 65 list PowerReviews. The two guides rank the 1,000 largest online retailers by their North American web sales.
The suit, filed in the U.S. District Court in the Northern District of California, claims that Bazaarvoice failed to report the acquisition as required under the Hart-Scott-Rodino Antitrust Act of 1976. The department said it began to investigate the acquisition shortly after the deal closed. It says that internal Bazaarvoice documents show that company officials viewed the acquisition as eliminating the company’s primary competitor and providing “relief from price erosion.”
“Bazaarvoice bought PowerReviews knowing that it was acquiring its most significant rival and hoping to benefit from diminished price competition,” says Bill Baer, assistant attorney general in charge of the Department of Justice Antitrust Division. “Without competitive pressure from PowerReviews, Bazaarvoice will be able to increase prices to retailers and manufacturers for its product ratings and reviews platform.”
In its own statement today, Bazaarvoice said the Department of Justice ignored evidence provided by the company that the deal would not reduce competition. “We spent more than six months explaining that there is robust and ample competition in the market for social commerce engagement tools,” the company says. Bazaarvoice accuses the department of taking a narrow view of the ratings-and-reviews market. “Ratings and reviews are but one of many tools that brands and retailers can use to engage with their customers as part of an overall social commerce strategy to increase awareness of their products. Other prominent tools include Facebook, Twitter and community forums.”
Bazaarvoice also says it complied with the “letter and spirit” of the Hart-Scott-Rodino Antitrust Act, adding that it was not required to report the transaction because PowerReviews was too small to trigger mandatory reporting requirements. Those requirements are determined by a number of factors involving assets, sales, stock value and transaction size.