Bazaarvoice/PowerReviews merger

Bazaarvoice/PowerReviews merger

Carl Shapiro, John Hayes, Matthew Johnson
Technology
Antitrust & Competition | Mergers & Acquisitions

CRA provided antitrust and competition economics analysis support to the DOJ in its successful challenge of the $168 million merger between Bazaarvoice and PowerReviews, Inc.

In January 2013, the DOJ challenged the merger and filed a civil lawsuit over concerns that the completed transaction between the two ratings and review (R&R) social software companies was anticompetitive. The ruling, announced on January 8, 2014, in the United States District Court for the Northern District of California, concluded that the merger violated Section 7 of the Clayton Act and U.S. antitrust law.

CRA economists working on behalf of the DOJ analyzed antitrust and competitive issues around pricing for R&R. Professor Carl Shapiro, the Transamerica Professor of Business Strategy in the Haas School of Business at the University of California at Berkeley and a Senior Consultant to CRA, applied methods endorsed by the 2010 Horizontal Merger Guidelines and testified that R&R was a relevant product market, distinct from one that encompasses a wider range of online user generated content. The CRA team also analyzed available win/loss data to evaluate the intensity of competition between the merging firms. CRA’s analyses demonstrated that the two companies frequently compete head-to-head, and that the remaining options were unlikely to replicate the leverage this afforded customers during price negotiations.

In the Court’s decision, U.S. District Judge William H. Orrick III noted that Dr. Shapiro “testified convincingly that Bazaarvoice’s acquisition of PowerReviews is likely to have anticompetitive effects.”

Associate Principal Matthew Johnson led a team of CRA economists supporting Dr. Shapiro on the matter, including Vice President John Hayes, Hitesh Makhija and Jeanette Ling.