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H&R Blocked: US Authorities Might Take More Aggressive Approach to Mergers

 

WASHINGTON, D.C., February 27, 2012 -- In a recent Competition Law Insight article, Baker Botts L.L.P. Partner Charles Webb discusses how a Department of Justice win in a federal district court ruling last fall against H&R Block might affect the agency’s review of future mergers.

On October 31, 2011, Judge Beryl Howell of the US District Court for the District of Columbia permanently banned the proposed acquisition of 2SS Holdings Inc by H&R Block Inc (H&R Block), in response to a challenge brought by the antitrust division of the US Department of Justice (DoJ) under section 7 of the Clayton Act. The acquisition would have combined H&R Block with TaxACT, a popular tax preparation software product sold by 2SS Holdings.

The DoJ opposed the acquisition on the grounds that it would lead to a substantial lessening of competition in the sale of digital do-it-yourself (DDIY) tax preparation software products, which are used by consumers who are required to prepare and file tax returns with US federal and state governments.

Beyond the irony that the decision giving the death knell to this acquisition was handed down on Halloween, United States v H&R Block Inc is significant in several respects, Webb states in the article. It represents a relatively rare judicial decision in the United States after a full trial on the merits over a merger challenge under the Clayton Act. It was the first time the DoJ has fully litigated a merger case since its failed effort to block Oracle’s acquisition of PeopleSoft in 2004. Perhaps most significantly, the case was the first opportunity for judicial interpretation of the 2010 horizontal merger guidelines.

Webb’s article reviews the 2010 horizontal merger guidelines and then discusses their interpretation in the H&R Block decision. It suggests key lessons from the court’s decision before concluding with a consideration of how the DoJ’s victory in H&R Block may affect its review of other mergers going forward.

The complete Competition Law Insight article is available here.

Background on the Antitrust practice at Baker Botts is available here.

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