Bazaarvoice rejects DoJ lawsuit over PowerReviews deal

Fri Jan 11, 2013 9:38am EST

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Jan 11 (Reuters) - Bazaarvoice Inc, which helps companies run online consumer reviews, said its purchase of PowerReviews Inc would not cut competition, after the U.S. Justice Department sued the company to try to force it to sell some assets.

The department challenged the acquisition and said it sought to prevent one firm from dominating the product rating and review platforms market, prompting a brokerage to cut its rating on the company's stock.

The firms help companies use social media to advertise and also try to control any damage to clients' reputations from bad reviews. PowerReviews helped online retailers set up customer review sections on their websites so that they could compete with Amazon.com.

"We 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," Bazaarvoice said in a 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."

Bazaarvoice's 700 clients include Panasonic Corp, Burpee, Timex, Infiniti and Macy's Inc, according to its website.

BMO Capital Markets downgraded the company's stock to "market perform" from "outperform."

"After the departure of the CEO, a billings growth deceleration, the admission of sales execution issues, and now the announcement of a DOJ antitrust suit ... our confidence in a recovery over the next 12 months is now too low to support a bullish call on the stock," BMO analyst Karl Keirstead said.

Bazaarvoice made a splash when it debuted on the Nasdaq in February 2012, opening at $16, but its shares have lost more than half their value since. They fell 17 percent on Thursday on news of DOJ's lawsuit and closed down at $7.49.