Jan 10 (Reuters) - A federal court ruled against Bazaarvoice Inc’s $168.2 million acquisition of its main rival PowerReviews Inc, saying the deal could lead to one firm dominating the online product rating and review market, a court filing showed.
The U.S. Justice Department sued Bazaarvoice last year, calling the deal anticompetitive, and tried to force it to sell some assets.
For its part, Bazaarvoice, which helps companies run online consumer reviews, said its buy of PowerReviews would not cut competition and pointed to Amazon.com and Google as potential rapid entrants in the ratings and review market, according to the filing.
Federal judge William Orrick said in his ruling dated Jan. 8 that Bazaarvoice violated the law by purchasing its closest and only serious competitor, creating the likelihood of an anticompetitive effect in the ratings and review market in the United States.
The ruling was entered in the federal court website late on Thursday.
“While Bazaarvoice indisputably operates in a dynamic and evolving field, it did not present evidence that the evolving nature of the market itself precludes the merger’s likely anticompetitive effects,” Judge Orrick wrote.
In light of the ruling, the U.S. government would be entitled to an injunction that requires Bazaarvoice to divest PowerReviews, the filing showed.
However, Judge Orrick said divestment “is not a simple proposition” 18 months after the acquisition, and has scheduled a hearing for Jan. 22 to record the parties’ perspectives on an appropriate remedy.
Bazaarvoice said in a statement late on Thursday that it is disappointed with the ruling, but will not make a decision regarding an appeal until after the court concludes the remedy phase of the litigation.
“We believe that the merger with PowerReviews has been beneficial to customers. With the court’s decision, we will now do everything we can to help ensure that the final order achieves the best outcome for our clients, shareholders, and employees,” Gene Austin, president of Bazaarvoice said.
Bazaarvoice and PowerReviews help companies use social media to advertise and also try to control any damage to clients’ reputations from bad reviews.
PowerReviews business helps online retailers set up customer review sections on their websites so that they could compete with Amazon.com.