H & R [Block] vs. DoJ?
The Department of Justice has announced that it has filed suit to stop the merger of Second Story Software and its TaxACT product with H & R Block, the large tax-preparer which markets Tax Cut software. The combination would mean that the merged company plus Intuit (TurboTax) would control 90% of the do-it-yourself tax software market. As expected, H & R Block called the merger smart and pro-competitive, while Second Story Software did not comment.
On the substance, the Justice Department position is reasonable here, a business segment 90% conrolled by two companies would be able to establish powerful barriers to entry. Additionally, H & R Block has hardly been a paragon of virtue, with its run-ins over Rapid Refund Loans. However, the Holder Justice Department hardly has been on best behavior either; albeit that most of its flaws have stemmed from political rather than economic calculations. In sports, the obvious solution would be a double forfeit.
On the substance, the Justice Department position is reasonable here, a business segment 90% conrolled by two companies would be able to establish powerful barriers to entry. Additionally, H & R Block has hardly been a paragon of virtue, with its run-ins over Rapid Refund Loans. However, the Holder Justice Department hardly has been on best behavior either; albeit that most of its flaws have stemmed from political rather than economic calculations. In sports, the obvious solution would be a double forfeit.
posted by Dan Meyer at 7:12 PM
2 Comments:
Disclaimer: I work for H&R Block, although I am not a blind apologist for the company. I get where the DoJ is headed here, but I see this reported more or less uncritically:
The combination would mean that the merged company plus Intuit (TurboTax) would control 90% of the do-it-yourself tax software market.
and I have to wonder - how much of that share is Intuit's, and how much of that is the combined Block/SS share? If Intuit's share is much larger than the combination - and I would not be at all surprised if that were the case, given what I see in my practice - then it might very well be the case that the combination can be more competitive with Intuit, and it becomes an issue of whether it's better to have two decent-sized entities duking it out or whether it's better to have one dominant entity and two smaller ones fighting for the scraps.
Your point is a fair one--I do not know the comparative shares. All this said, 90% control by two parties is not good for competition, whether #1 has 80% and 2 has 10% or #1 has 50% and #2 has 40%. Only if Intuit has 80% and H&R WITH the new acquisition has 10% (or comparable) could I see a measurable improvement in competition and my suspicion is that Tax Cut prior to the proposed merger had significantly more than 10% (probably at least 25%) market share in the do-it-yourself tax software market.
Post a Comment
<< Home