U.S. District Judge William Orrick III, Northern District of California (S. Todd Rogers / The Recorder)
SAN FRANCISCO — Online ratings firm Bazaarvoice Inc. has agreed to dissolve a 2012 merger to settle claims with the U.S. Department of Justice and address the concerns of a federal judge about the union’s potential anticompetitive effects.
Under the settlement, which was disclosed in court papers Thursday, Austin-based Bazaarvoice will divest all assets it gained through its acquisition of PowerReviews Inc., previously its main competitor. Bazaarvoice will pay the government more than $222,000 for the costs of litigation. It also agreed not to appeal an order from U.S. District Judge William Orrick III of the Northern District of California finding the merger would likely suppress competition in the market for online ratings and reviews.
The DOJ’s suit last year to unravel the marriage of two little-known social commerce companies turned heads in the Valley. After a bench trial in 2013, Orrick sided with the DOJ and ordered the parties to propose a remedy.
Bazaarvoice said in a separate announcement on Thursday that it has signed a letter of intent to divest the assets to Viewpoints, another company in the consumer reviews industry. The acquisition is expected to close by July 31, pending court approval of the settlement.
“We’re happy to be in what we hope will be the final stretch of putting this case behind us and returning our full attention to delivering innovative customer engagement solutions to the market,” a Bazaarvoice spokesman said in a statement.
Wilson Sonsini Goodrich & Rosati partner Boris Feldman, who represented Bazaarvoice in the three-week bench trial, declined to comment. Peter Huston, assistant chief of the DOJ’s Antitrust Division in San Francisco, did not respond to a request for comment.
Bazaarvoice and the DOJ quibbled over the best way to unravel the merger and restore PowerReviews to its prior role in the marketplace. Under the terms of their deal, Bazaarvoice will be barred from poaching any customers currently using PowerReviews’ ratings and reviews platform. Bazaarvoice must also establish a program to encourage PowerReviews’ customers to keep using the service.
Taking steps to reverse a consummated merger is hardly a perfect science, said Kaye Scholer counsel Philip Giordano, a former trial attorney in the DOJ’s Antitrust Division.
“The division is in the business of looking into its crystal ball,” he said. “It can’t predict the future perfectly, and there’s always the question of whether or not enough customers will follow PowerReviews to the divestiture buyer.”
In one win for Bazaarvoice, the company will not be required to license its entire platform to the acquirer if the new business does not have enough customers, a term the DOJ had originally sought.
That provision might have been a tough sell with Orrick, Giordano said. “The antitrust division, and the government in general, are entitled to restore competition to the market. But cloning Bazaarvoice may have gone further than that more limited goal,” he said.
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