Friday, November 18, 2011

Memorandum opinion in United States vs. H&R Block now available

By Till Patrik Holterhus, MLE.

The Memorandum Opinion in United States vs. H&R Block was finally released on the 10th of November, 2011. It is the first completely litigated case since United States vs. Oracle in 2004 and includes some really interesting findings.

The United States, through the Antitrust Division of the Department of Justice, filed an action on the 23rd of May, 2011. The Department of Justice sought to enjoin defendant H&R Block, Inc. from acquiring defendant 2SS Holdings, Inc., which sells digital do-it-yourself tax preparation products marketed under the brand name TaxACT. 

The Court ultimately agreed with the Department of Justice, concluding that the proposed merger between H&R Block and TaxACT violates Section 7 of the Clayton Act because it is reasonably likely to cause anticompetitive effects. The government was able to establish a prima facie case indicating that anticompetitive effects are likely to result from the merger. The defendants were not able to make a showing that the government's market share statistics give an inaccurate account of the merger's probable effects on competition in the relevant market. To the contrary, the totality of the evidence confirmed that anticompetitive effects are a likely result of the merger, which would give H&R Block and Intuit control over 90 percent of the market for digital do-it-yourself tax preparation products. 

The full Memorandum Opinion is available here.

3 comments:

  1. Dear Till Patrick, thanks for the news. Just a few general comment about the decision, after skim it:

    1. It is interesting to point out that that the Court heavily rely in the presumption of concentration from the HHI Index. In this strand it seems at least curious to me, when the Court analyzed the potential competitors, that despite some of them have the ability to growth -but prefer no to do that- the Court consider this self-restraint as a fact of less competition (p. 55)

    2. I think the key point that the court found is that tax service uses sensitive data, so companies and people use a provider that give confidence (p.57). The Court stated that to build confidence requires time and money. But build this confidence is really as difficult to replicate it to be a barrier to entry? How easy today people give personal data to companies like facebook, google, etc? Are income information much more confidential that personal data? Maybe, but can a new company with a strict policy help to build its confidence easily?

    3. Regarding the coordinate effect, the Court found evidence that in a post-merge scenario the competitor will no fight into a free-service, as a result of coordinate action. Is the free service the focus and objective of business in the new economy?

    4. Can the Court impose, as a mitigation action, that consumer may requires their old information to a company if they shift to a competitor?

    Any thoughts about the decision?

    Juan

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