LAW 642 Lecture Notes - Lecture 41: Oligopoly, Intuit, H&R Block
30 May 2020
School
Department
Course
Professor
H&R Block continued…
- Coordinated effects:
o PNB presumption: gov’t had established based on high HHI, and defendant
failed to rebut.
o Barriers to entry: one of the prime factors which can serve to rebut PNB
presumption worked against D because reputation and strong brand name kept
competitors from and entrants from challenging the major players.
▪ An unusual significance to reputation makes sense in this market because
people are careful about who they trust their taxes with.
o Theory of harm: given vulnerability of market to coordinated effects, the court
found that the merger decreased the likelihood of a “race to free” software, in
which competitors decreased price until they attracted consumers by providing
free software. In doing so they gave credence to the facts that:
▪ History of collusion: H&R and Intuit had previously coordinated
lobbying efforts.
▪ Maverick firm: TaxAct (the target firm) had shaken things up by offering
free software, with paid upgrades, a model that competitors subsequently
had to match, presenting a greater danger to competition in the elimination
of a firm more willing to break from prevailing norms of the oligopoly.
- Unilateral effects: court also found unilateral effects likely since this was elimination of
“head to head” competitors.
o Market definition: D attempted to recharacterize submarkets as premium vs.
bargain, with the merging parties in separate ones.
