FinTech: Intuit-Credit Karma Deal Under DOJ Lens (ProPublica)
There are fears that Intuit’s takeover of Credit Karma will reduce competition in the tax services business.
According to ProPublica, a non-profit newsroom that investigates abuse of power, the US Justice Department will investigate Intuit Inc (NASDAQ: INTU)’s $7.1 billion acquisition of Credit Karma announced in February. Intuit is an American business and financial software company that develops and sells financial, accounting, and tax preparation software. It has a market capitalization of $81 billion. Credit Karma is a fintech that launched a free tax return service that became a formidable rival to Intuit.
According to ProPublica, Intuit has the lion’s share (67%) of the online tax preparation market. In February, ProPublica wrote that the transaction would be anti-competitive because it would eliminate a rival and perpetuate Intuit’s dominance.
“Allowing a near-monopolist to eliminate a maverick competitor poses obvious risks of harm,” then said John Newman, a former DOJ Antitrust Division trial attorney. He is now a law professor at the University of Miami.
“It’s hard to imagine any reason why this should be allowed.”
ProPublica now claims to have obtained a June memo from government lawyers that described the tax giant’s strategy. It reveals that the government is concerned about the effect of the deal on the consumer tax preparation platforms and software market.
According to ProPublica, at the moment the government is on a fact-finding mission. It has requested additional information from the deal-making companies.
The government’s probe includes questions asking Intuit to reveal more details about its role in the Free File program, under which TurboTax and other tax filing companies are required to offer free tax filing options to Americans.
Based on the information received, the government will decide on the transaction.
It could be a tough call, with a rising swell of protest surrounding the deal.
Chris Sagers, an antitrust expert at the Cleveland-Marshall College of Law, said it appeared that Intuit was acquiring Credit Karma to eliminate a competitor. “It won’t be lost on the DOJ staff lawyers that it is likely Intuit’s motive.”
Latest Alternative Investment News
According to an exclusive report today by Reuters, Robinhood Markets Inc. the trading app so popular with millennials, raised $660 million in its latest Series G funding round. Robinhood previously…
Korean media outfit, Herald reported Tuesday that Bithumb, the country’s biggest cryptocurrency exchange with more than 50% market share and 4.77 million members, is up for sale. The Herald quoted…
Triterras Fintech launched its Kratos blockchain-enabled, end-to-end global trade and trade finance platform in June 2019 with the Trade Discovery module. In February 2020, Triterras added the Trade Finance module…
Enmotus Inc. focuses on innovations in PC storage using its patented Artificial Intelligent algorithms. It announced Tuesday the launch of FuzeDrive, the first-ever AI-powered Solid State Drive (SSD). FuzeDrive blends…