H&R Block Faces Opposition Over The Acquisition Of TaxACT: Federal Antitrust Suit Filed.

While most people are focused on their 2010 tax returns, there is tension in the market. An antitrust lawsuit was filed on Monday by the U.S. Department of Justice in a move to prevent the acquisition of TaxACT by H&R Block. Talk of the $287.5 million deal has led to fears of increased costs and an obstruction of improvements in the market without a third major player to drive competition.

These fears surfaced after H&R Block (Kansas City) revealed its intention in October to merge TaxACT and H&R Block AT Home, creating a division that would be headed by the team from TaxACT.

The Antitrust Division’s assistant attorney general, Christine Varney, issued a release charging that the deal would result in millions of citizens being charged higher costs for digital tax products classified as “do-it-yourself”. Varney further argued that the merger would wipe out advancements made in areas such as free federal filling which is currently a strong suit for TaxACT.

Requests for a response to Varney’s assertions  were not immediately met by H&R Block .

In his contribution to the debate, former H&R block CEO Alan Bennett argued that H&R Block would continue offering free filing for most basic federal returns. He further added that on the one hand this was good since the model is cost effective, efficient and  useful however, the approach is ultimately geared towards getting users of the simple free software to  pay for more complex filing.

Citing that 90 percent of the tax market is currently controlled by H&R Block, TaxACT and Intuit, Varney stressed that permitting the merger would phase out the aggressive competition between the two companies leaving Intuit as the only other large competitor.


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