The U.S. Department of Justice filed suit in federal court in Washington today to try to stop a proposed deal that would combine two of the top three tax-return preparation companies, H&R Block Inc. and the maker of the TaxACT software.
Assistant Attorney General Christine Varney said H&R Block’s proposed acquisition of the rival, 2SS Holdings Inc., would “destroy the head-to-head competition between these two companies.” The competition, she said, has led to better deals for consumers, including H&R Block’s decision to offer free software for the filing of federal tax returns.
“We are blocking this transaction because the proposed merger would substantially lessen competition in the tax return preparation market,” Varney, head of DOJ’s antitrust division, told reporters on a conference call.
The companies announced their proposed $287.5 million cash deal in October. A spokesman for 2SS Holdings Inc. declined to comment today. H&R Block did not immediately respond to a request for comment.
H&R Block ranks second in market share after Intuit Inc., according to DOJ’s complaint filed in U.S. District Court for the District of Columbia. Together, the two companies and 2SS Holdings control 90% of the market, so the proposed deal would “essentially create a duopoly,” the complaint says.
The Justice Department’s move is the latest of several antitrust enforcement actions in recent weeks. On May 16, the department successfully blocked the proposed acquisition of NYSE Euronext by two other stock exchanges. Also this month, the department filed a lawsuit to try to block VeriFone Systems Inc.’s proposed purchase of Hypercom Corp.