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James Fishkin, Mar 13, 2014
United States v. Bazaarvoice, Inc. is a particularly important and highly complex case that raises significant issues regarding (i) the application of merger analysis to high-tech industries, (ii) the importance of deal rationale documents, and (iii) the weight given to customer opinion testimony in merger cases. Judge Orrick applied traditional merger analysis to determine that Bazaarvoice’s consummated acquisition of rival PowerReviews was anticompetitive and in violation of Section 7 of the Clayton Act.
Although this merger involves an evolving high-tech product—online platforms for product ratings and reviews—Judge Orrick methodically utilized the same analytical tools that are applied to mergers in more traditional industries to find that Bazaarvoice and PowerReviews were each other’s closest competitor in a narrow, highly-concentrated product market with virtually no remaining competitors and entry barriers. He also found that competition between the merging firms had resulted in lower prices. Based on the totality of the evidence, Judge Orrick found that that the transaction would likely result in “significant anticompetitive unilateral effects.”
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Bazaarvoice: Applying Traditional Merger Analysis to a Dynamic High-Tech Market