* Justice Dept says needed antitrust clearance never sought
* Bazaarvoice shares tumble 16 percent
* Justice Dept seeks certain divestitures by Bazaarvoice
WASHINGTON, Jan 10 The U.S. Justice Department
filed a lawsuit on Thursday challenging the acquisition last
June by Bazaarvoice Inc of its main rival, saying that
the required antitrust clearance was never sought and that the
deal reduced competition for product ratings platforms.
Shares of Bazaarvoice slumped on news of the lawsuit over
its $168.2 million purchase of PowerReviews Inc, falling 15.8
percent to $7.49 on Nasdaq.
The two 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.
The Justice Department, which noted that Bazaarvoice's
purchase of PowerReviews Inc has been completed, asked the court
to require Bazaarvoice to divest certain assets, and by doing so
create a new company to replace PowerReviews.
It said the companies did not report the transaction to
antitrust authorities for approval, as required by law for a
transaction of that size.
"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," Bill Baer, who was sworn in last week as head of
the Justice Department's Antitrust Division, said in a
In its complaint, the Justice Department cited a comment by
Erin Defosse, Bazaarvoice's vice president of strategy, that
"there really isn't a market ... it is (Bazaarvoice) or
It also cited a Bazaarvoice executive as saying that he
expected prices for the company's products to go up as a result
of the transaction.
Bazaarvoice's 700 clients include Panasonic, Burpee, Timex,
Infiniti and Macy's, according to its website. The Austin,
Texas, based company had no immediate comment on the complaint.
Bazaarvoice went public last February at $12 a share, and
began trade at $16 in its market debuted on the Nasdaq on Feb.
The Justice Department, in its complaint, also seeks to
have Bazaarvoice pay the government's costs in bringing the
The case was filed in the U.S. District Court for the
Northern District of California. It is No. 13-0133.