Antitrust Suit Filed By DoJ Seeks To Prevent H&R Block Acqui

May 23, 2011

The Department of Justice filed a civil antitrust lawsuit on Monday to stop the tax service H&R Block (NYSE:HRB) from buying 2SS Holdings, a unit of TA IX L.P., the maker of one of its rivals, TaxAct.The proposed purchase "would combine the second- and third-largest providers in that market and essentially create a duopoly," the department alleged in a complaint filed in a Washington, D.C. federal court. H&R Block had agreed to buy 2SS Holdings in a transaction valued at $287.5 million in October.TaxAct has served as "a maverick in the market," the department said, introducing innovations to the marketplace such as the free filing of federal tax returns on the Internet it pioneered in 2005.Assistant Attorney General Christine Varney said in a statement, "The combination of H&R Block and TaxAct would likely lead to millions of American taxpayers paying higher prices for digital do-it-yourself tax preparation products."The Justice Department also had concerns that the acquisition would lead to more cooperation between H&R Block and its remaining rival, Intuit Inc. (NASDAQ:INTU), the maker of personal finance programs Quicken and TurboTax.The department cited an internal H&R Block email, which stated, "The other possible strategic consideration is that Intuit and HRB together would have 84% of the digital market and we both obviously have great incentive to keep this channel profitable."Shares of H&R Block are trading down 1.29% at $16.12.