The FTC recently announced a settlement with a specialty software developer, requiring it to divest a business that it had acquired more than a year earlier for $8.7 million. The challenge to an acquisition that was so small that it did not have to be reported under the Hart-Scott-Rodino Act is the most recent in a growing number of government challenges to consummated non-reportable deals. It is a reminder that mergers, no matter how small, may be subject to antitrust scrutiny and may not fly under the enforcement radar. Year to date, the DOJ and FTC have challenged five non-HSR reportable deals, which is as many as the agencies have challenged collectively in any previous year, and the DOJ is currently investigating at least one other non-reportable transaction that recently closed.
Focus on High-Tech Mergers and Acquisitions
Two of the five challenges to non-reportable deals this year are in the tech industry: Solera Holdings, Inc.’s acquisition of Actual Systems of America, Inc. and Bazaarvoice, Inc.’s acquisition of PowerReviews, Inc.
Antitrust enforcement in the tech sector has been a priority of the Obama Administration. Obama’s first Assistant Attorney General for Antitrust identified antitrust issues “arising in high-tech and Internet-based markets” as an area of focus in her first speech. And in March 2013 when President Obama named Edith Ramirez to head the FTC, a White House official emphasized that “[o]ver the past few years, Ramirez has been instrumental in ensuring there is robust competition and innovation in the high-tech marketplace.”
Solera/Actual Systems: FTC Challenges $8.7 Million Acquisition
On October 24, the FTC announced approval of a Final Order settling charges that Solera’s 2012 acquisition of Actual Systems was anticompetitive. The settlement requires Solera, a provider of software and services to the automobile insurance claims processing industry, to divest assets to resolve FTC charges that the acquisition of rival Actual Systems violated antitrust law.
Bazaarvoice/PowerReviews: DOJ Goes to Court Attempting to Unwind Non-Reportable Acquisition
In Baazarvoice/PowerReviews, the DOJ alleged in its suit that Bazaarvoice’s acquisition is likely to lessen competition for product rating and review platforms used to collect and display consumer-generated online product feedback. The DOJ supported its complaint with evidence, presented at trial, from company documents, including quotes from a company co-founder stating that the acquisition would “[e]liminat[e] [Bazaarvoice’s] primary competitor” and provide “relief from price erosion.” Bazaarvoice has taken issue with the quotes, which it alleges are “taken out of context,” and what it asserts is an “overly narrow” product market. On October 15, 2013, the parties presented their closing statements and are now awaiting the judge’s ruling.