The U.S. Department of Justice (DOJ) has launched a probe into Intuit’s $7.1 billion purchase of Credit Karma.
ProPublica reported the DOJ has raised questions about potential antitrust issues if Intuit, the maker of TurboTax, takes over its former rival that offered free tax preparation tools.
“Allowing a near-monopolist to eliminate a maverick competitor poses obvious risks of harm,” one former DOJ lawyer told ProPublica of Intuit’s proposed Credit Karma acquisition. “It’s hard to imagine any reason why this should be allowed.”
Within weeks of the purchase announcement, U.S. Rep. David Cicilline, (D-Rhode Island) raised questions about the deal. In a letter to the DOJ’s Assistant Attorney General of the Antitrust Division, the chairman of the House Subcommittee on Antitrust, Commercial and Administrative Law urged scrutiny of the deal.
“I have serious concerns that this transaction is an attempt by Intuit, a dominant incumbent, to eliminate an innovative and disruptive upstart, and that if permitted, it will harm the competitive process,” the Rhode Island Democrat wrote.
U.S. Senator Ronald Wyden (D-Oregon) raised similar concerns.
“Without Credit Karma’s free tax filing product, consumers will have far fewer choices and many of them will have to pay $60 and up for a product that is available free today,” he wrote to the DOJ.
In February, Intuit, the Mountain View, California tax preparation software company, announced that it had agreed to acquire Credit Karma, with more than 100 million members in the U.S., Canada and the United Kingdom. The deal to buy the San Francisco company, with nearly $1 billion in revenues last year, has fueled Intuit’s growth.
The report said while Credit Karma filed 40 million returns last year, it ranks as the fifth-largest online tax filing provider and has been growing.
Intuit dominates online tax preparation with a 67 percent market share in 2019. Federal lawyers said if Intuit is allowed to take over the startup it could harm consumers seeking no-cost tax prep options, according to a June memo obtained by ProPublica.
Christopher Sagers, an antitrust expert at the Cleveland-Marshall College of Law, told ProPublica that it appears Intuit’s goal is to eliminate a competitor.
“It won’t be lost on the DOJ staff lawyers that it is likely Intuit’s motive,” he said.
An Intuit spokesman said the company is confident in the clear consumer and competitive benefits of the merger.
The DOJ declined to comment.
Credit Karma did not respond to a request for comment.
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