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Government Blocks Merger of H&R Block and TaxACT

This article was written by in Economy, Taxes. 11 comments.


The Department of Justice filed an anti-trust lawsuit against H&R Block. This second-largest income tax preparation service intended to acquire the company that owns third-largest income tax preparation service, TaxACT. Based on the number of customers who used these companies’ services to self-file 2010 tax returns, the combined company would still be a distant second to Intuit’s TurboTax. The new combined tax-filing service would be run by TaxACT’s management team, which is surprising considering H&R Block’s At Home product has more customers and is a more recognized brand.

According to the government agency, the proposed merger would result in too much consolidation in the marketplace, decreasing choices for consumers and increasing prices. Consumers’ interests are better served in a competitive marketplace, and the Department of Justice has the job of stepping in when a merger or acquisition would result in unfair competition. For a while, the DOJ has been quiet, allowing companies to consolidate, deferring to market forces. The DOJ didn’t act when AT&T planned to acquire T-Mobile, a deal that would create a duopoly among mobile phone service providers. The government also didn’t have a problem with Comcast’s purchase of NBC Universal, which put the full stream of television, from production to broadcast to delivery, in the hands of one company.

H&R Block responded to the government’s suit with claims that the merger would increase options for tax-filing customers.

CNN, H&R Block

Published or updated May 24, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 11 comments… read them below or add one }

avatar Bobka ♦13 (Newbie)

Like airline seats, the need for tax software disappears on a date certain and is often discounted as April 15 approaches. Numerous free filing options also exist for those who qualify. I do not understand why DOJ would try to block this combination when so many other reasonable, low-priced, and free options are available to the consumer.

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avatar wylerassociate ♦162 (Cent)

I don’t have a problem with the DOJ blocking the merger but I just don’t understand why this merger is being blocked but comcast/nbc universal or at&t/t-mobile weren’t blocked.

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avatar Krantcents

I sometimes think that the DOJ is arbitrary in their decisions because lack of consistency. The airline mergers is creating a far less competitive environment, yet they pass through easily.

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avatar skylog ♦368 (Nickel)

i agree, this is what i was thinking. i suppose we still do not know what will happen with at&t / t-mobile, but that would seem like a bigger “problem” than this deal.

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avatar Naomi Tapia

I agree with the comments already made… It seems like we don’t have a consistent anti-monopoly policy. What is more unfair than some of the monopolies that already exist? I think of utilities, as well. The other day I read an article about a company in Europe that allows individuals to negotiate their utility rates by united with blocks of 10,000 other individuals. This would never work in the US since we almost never have a choice about our providers of certain services. Outrageous!

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avatar Kyle

It depends on where you live. In my area we have plenty of choices for pretty much all utilities. In areas that lack choice, regulation is usually prevalent. Consumer choice is not the primary driver of anti-trust activity; rather, consumer welfare is. Having choice in itself does not necessarily promote consumer welfare.

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avatar KNS Financial ♦404 (Nickel)

I’m not really sure how I feel about the DOJ blocking this particular merger, but it’s terrible to see how inconsistent the regulatory bodies can be with these types of decisions. I read an article recently stating that an FCC commissioner who approved the NBC/Comcast deal, is leaving to go work for Comcast!

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avatar shellye ♦107 (Cent)

I’m not a conspiracy theorist or anything, but I wonder if the Treasury Dept. had problems with this merger for some reason, and lobbied the DOJ to block it. Seems like a really random and arbitrary ruling to me…

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avatar Kyle

Anti-trust action depends not so much on the total number of competitors in a market as the actual impact on consumers. If a single monopoly was deemed not to have adverse effect on consumers, the DOJ would probably do nothing about it. There’s a lot of sophisticated statistical analysis that goes on behind the scenes that I don’t fully understand. Suffice to say these rulings probably WOULD appear arbitrary and inconsistent to outsiders who don’t know the methodology even though they are probably not. I’m pretty comfortable with their ruling, though.

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avatar aryn

I agree that the decision is arbitrary, but I say “yay.” I love TaxAct. It’s loads cheaper than H&R Block, so I would hate to see it mergered out of existence.

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avatar Jeff

I think that DOJ’s problem might be that the new H & R Block would have a such a huge part of the market for both “walk-in” business and software based filing. TurboTax has the market share that it does because of growth and not acquisitions.

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