The 2010 tax season is over, but one of the largest tax preparation services never rests when it comes to finding a bigger niche in the market. Over 22 million people worldwide use H&R Block’s in-house services each year to prepare their taxes. But with an increase in the demand for do-it-yourself tax preparation software, H&R Block has been feeling the pressure to compete. It is estimated that nearly 40 million people prepare their taxes using tax preparation software such as Turbotax or TaxACT. H&R Block’s tax preparation software hasn’t gained as much momentum in the market as hoped, and they are now attempting to purchase rights to the TaxACT software in efforts to gain more market share.
H&R Block Attempts To Dominate The Market
H&R Block’s tax preparation software operates as third in the top three tax preparation software products available, behind Turbotax and TaxACT. Acquiring the rights to TaxACT would put H&R Block as majority owner of the market share, creating a duopoly. With so much stake in the market, it is likely consumers would face an increase in prices for use of the product and a decrease in quality of product innovation. Assistant Attorney General Christine Varney said, “We are blocking this transaction because the proposed merger would substantially lessen competition in the tax preparation software market, resulting in higher prices, lower quality and reduced innovation.”
The government filed a civil antitrust lawsuit to prevent H&R Block from acquiring ownership of TaxACT software stating the lack of competition between companies would have detrimental effects on the industry. Consumers are hesitant about spending in this economy, and the last place they need added stress is around the already daunting task of yearly tax preparation. Christine Varney, said Monday that the proposed acquisition “would destroy the head-to-head competition between these two companies, leaving only one other major competitor. That is not enough competition in this important and valuable industry.”