(By Balachander) Bazaarvoice Inc.'s (NASDAQ: BV) acquisition of PowerReviews Inc. has been challenged by the U.S. Department of Justice (DOJ).
The DOJ filed a antitrust lawsuit against the social media marketing company on Thursday, saying the $168.2 million acquisition substantially lessened competition in the market for product ratings and reviews platforms in the United States, resulting in higher prices and diminished innovation.
"This lawsuit seeks to prevent one firm from dominating the product rating and review platforms market, and demonstrates that transactions that are not reported to us are not immune from scrutiny," the DOJ said.
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The department said Bazaarvoice's acquisition of PowerReviews was not 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 acquisition of PowerReviews has given Bazaarvoice the incentive and ability to raise the price of its product ratings and reviews platform above a competitive level, the department added. As a result of the transaction, many customers have lost critical negotiating leverage and are vulnerable to anticompetitive price increases.
Bazaarvoice responded to the DOJ's action, saying it provided the DOJ with extensive documents, data, and information demonstrating that our acquisition of PowerReviews was procompetitive and did not result in a lessening of competition.
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"Put simply, at the time it was acquired, PowerReviews was in no way the viable competitive threat the DOJ's complaint tries to suggest," Bazaarvoice said.
The stock, which has been trading in the 52-week range of $7.48 to $21.10, ended at $7.49 on Thursday.