• by Wendy Davis  @wendyndavis, January 13, 2014

Bazaarvoice's $168 million acquisition of the rival company PowerReviews violated antitrust laws, a federal judge has ruled.

“The evidence that Bazaarvoice and PowerReviews expected the transaction to have anticompetitive effects is overwhelming,” U.S. District Court Judge William H. Orrick III in the Northern District of California wrote in a 140-page decision declaring the merger anticompetitive. “Bazaarvoice recognized PowerReviews as its only real commercial competitor, and vice versa.”

Both companies power online reviews for retailers. Bazaarvoice, which acquired PowerReviews in 2012, didn't seek regulatory approval before the merger. Six months after the acquisition, the Department of Justice alleged in a lawsuit that the deal violated antitrust laws.

Bazaarvoice president Gene Austin said in a statement that the company was disappointed in the ruling. “We believe that the merger with PowerReviews has been beneficial to customers,” he stated.

Founded in 2005, Bazaarvoice powers online reviews for retailers like Best Buy, Costco, Dell and Macy's. PowerReviews tended to serve smaller clients, but also counted retailers like Toys 'R' Us and Staples amount its customers, according to the court.

Orrick wrote in his decision that Bazaarvoice and PowerReviews competed for business before the merger, and that PowerReviews' “aggressive approach to pricing frequently forced Bazaarvoice to defend its more expensive prices.”

In ruling that the deal was anticompetitive, Orrick pointed to evidence that a Bazaarvoice executive noted in July 2011 that PowerReivews used a “scorched earth approach to pricing,” which prompted questions from Bazaarvoice's clients. “If a prospective customer was unwilling to pay a premium over the PowerReviews price, Bazaarvoice frequently matched the PowerReviews price,” Orrick wrote.

Bazaarvoice unsuccessfully argued that its competition included a broad range of companies, including social platforms, like Facebook and Twitter. But Orrick disagreed. “None of those products provides potential consumers with product-specific feedback from other consumers at the point of purchase,” he wrote.

Orrick will hold a hearing later this month to determine what sort of sanctions are appropriate. Bazaarvoice won't decide whether to appeal the ruling until after that phase of the litigation, the company said in a statement.