United States v. Intuit Inc., et al.; Proposed Final Judgment and Competitive Impact Statement, 81501-81517 [2020-27604]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 85, Number 242 (Wednesday, December 16, 2020)]
[Notices]
[Pages 81501-81517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27604]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Intuit Inc., et al.; Proposed Final Judgment and 
Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation, and Competitive Impact Statement have been filed with the 
United States District Court for the District of Columbia, in United 
States of America v. Intuit Inc. and Credit Karma, Inc., Civil Action 
No. 1:20-cv-03441-ABJ. On November 25, 2020 the United States filed a 
Complaint alleging that the proposed acquisition by Intuit Inc. of 
Credit Karma, Inc. would violate Section 7 of the Clayton Act, 15 
U.S.C. 18. The proposed Final Judgment, filed at the same time as the 
Complaint, requires Intuit and Credit Karma to divest Credit Karma's 
digital do-it-yourself (``DDIY'') tax preparation business, Credit 
Karma Tax, along with the products, intellectual property, and other 
related assets and rights that Credit Karma uses to provide DDIY tax 
preparation products to consumers.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website at https://www.justice.gov/atr and at the Office of 
the Clerk of the United States District Court for the District of 
Columbia. Copies of these materials may be obtained from the Antitrust 
Division upon request and payment of the copying fee set by Department 
of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's website, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be directed to Robert A. Lepore, 
Chief, Transportation, Energy, and Agriculture Section, Antitrust 
Division, Department of Justice, 450 Fifth Street NW, Suite 8000, 
Washington, DC 20530 (telephone: 202-476-0375).

Suzanne Morris,
Chief, Premerger and Division Statistics, Antitrust Division.

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Intuit Inc. and Credit 
Karma, Inc., Defendants.

Civil Action No.: 1:20-cv-03441-ABJ
Judge Amy Berman Jackson

[[Page 81502]]

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to prevent Intuit Inc. from acquiring Credit Karma, Inc. The 
United States alleges as follows:

I. Introduction

    1. Each year, nearly 140 million individuals, families, and 
households around the country file U.S. federal and state income taxes. 
The tens of millions of filers who choose a digital do-it-yourself 
(``DDIY'') tax preparation product have some choice, but one product 
dominates this market: TurboTax. Intuit, the maker of TurboTax, is by 
far the largest provider of DDIY tax preparation products, with a 66% 
market share. For more than a decade, Intuit's dominance has been 
nearly as certain as taxes themselves.
    2. Since 2008, Credit Karma has operated a popular personal finance 
platform that offers consumers a variety of free services, including 
credit monitoring and financial management. When Credit Karma launched 
its own DDIY tax preparation product in 2017, it was the first 
meaningful DDIY tax preparation product entry in at least a decade. 
Credit Karma's goal was clear: ``Just like it did with credit scores in 
2008, Credit Karma plans to change the tax preparation industry so 
people won't ever have to pay to do their taxes again.'' \1\ Credit 
Karma quickly became a significant competitor to Intuit, despite its 
recent entry and relatively small market share, because Credit Karma 
has always offered its DDIY tax preparation product to consumers 
entirely for free. This business model remains unique among DDIY tax 
preparation product providers.
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    \1\ https://www.creditkarma.com/ourstory.
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    3. Through Credit Karma's personal finance platform, Credit Karma 
offers its more than 100 million members free personal finance tools, 
such as free credit scores and monitoring, and tailored, third-party 
financial offers, including credit card, personal loan, and refinancing 
opportunities. Credit Karma is paid only by the third parties, and only 
when consumers take advantage of these customized offers. Credit Karma 
can take the data gathered from tax filings, with the filers' consent, 
to improve Credit Karma's offerings to its members. This, in turn, 
improves the likelihood that a consumer will take advantage of the 
offer. This process enables Credit Karma to provide a DDIY tax 
preparation product for free regardless of the U.S. federal or state 
tax forms used and complexity of the tax return.
    4. Thanks to its always-free strategy and enormous member base, 
Credit Karma became the fifth-largest DDIY tax provider after its first 
tax season and has grown significantly each year since, with over two 
million filers in 2020. Credit Karma has projected additional growth in 
the future as its product continues to get traction, and as it 
continues to add features and expand the scope of its DDIY tax 
preparation product.
    5. Although as the new player in the market Credit Karma serves 
only 3% of customers, Intuit has recognized that Credit Karma 
represents its most disruptive competitor for DDIY tax preparation. 
Credit Karma's always-free model poses a unique threat to Intuit 
because Intuit (and all other DDIY tax preparation providers) charges 
consumers for DDIY tax preparation products for anything beyond the 
most basic filings as well as often for state filings. Intuit relies on 
these fees for revenue. For example, Intuit charges individual filers 
substantial fees to use TurboTax to claim itemized deductions, report 
investment income, or claim self-employed business expenses, among 
other complex tax filings. The majority of TurboTax customers pay 
Intuit to use one of its DDIY tax preparation products. By contrast, 
Credit Karma offers these same services for federal and state tax 
returns to individuals for free, and there is no up-charging for 
additional complexity.
    6. Over the last four tax seasons, Credit Karma has begun to erode 
Intuit's dominance in the market for the development, provision, 
operation, and support for DDIY tax preparation products. Credit Karma 
has constrained Intuit's pricing, and has also limited Intuit's ability 
to degrade the quality and reduce the scope of the free version of 
TurboTax in order to drive customers to the paid versions. Customer 
losses to Credit Karma have also represented lost revenue to Intuit 
because many switchers were purchasing TurboTax paid products, not 
using TurboTax free offerings. Faced with stiff competition from Credit 
Karma and mounting losses of paying customers to Credit Karma's always-
free product, Intuit responded aggressively. Intuit lowered the prices 
and increased the quality of some of its products. This head-to-head 
competition with Credit Karma has benefitted many of the millions of 
Americans who use TurboTax each year, constraining Intuit's ability to 
charge higher prices and leading Intuit to increase the quality of its 
products.
    7. Intuit's proposed acquisition of Credit Karma will eliminate the 
growing threat posed by Credit Karma and further cement TurboTax's 
dominance. If the proposed transaction proceeds in its current form, 
consumers are likely to pay higher prices, receive lower quality 
products and services, and have less choice for DDIY tax preparation 
products. To prevent those harms, the Court should enjoin this unlawful 
transaction.

II. Jurisdiction and Venue

    8. The United States brings this action pursuant to Section 15 of 
the Clayton Act, 15 U.S.C. 25, to prevent and restrain Defendants from 
violating Section 7 of the Clayton Act, 15 U.S.C. 18.
    9. Defendants are engaged in, and their activities substantially 
affect, interstate commerce. Intuit and Credit Karma both provide DDIY 
tax preparation products that serve federal and state tax filers 
throughout the United States. The Court has subject matter jurisdiction 
over this action pursuant to Section 15 of the Clayton Act, 15 U.S.C. 
25, and 28 U.S.C. 1331, 1337(a), and 1345.
    10. Venue is proper under Section 12 of the Clayton Act, 15 U.S.C. 
22, and under 28 U.S.C. 1391(b) and (c).
    11. This Court has personal jurisdiction over each Defendant. 
Intuit and Credit Karma both transact business and are found within the 
District of Columbia.
    12. Intuit and Credit Karma have each consented to personal 
jurisdiction and venue in this jurisdiction for purposes of this 
action.

III. Defendants and the Proposed Transaction

    13. This case arises from Intuit's proposed acquisition of Credit 
Karma for approximately $7.1 billion, pursuant to an Agreement and Plan 
of Merger entered on February 24, 2020.
    14. Intuit is a large, public software company based in Mountain 
View, California that offers tax preparation, accounting, payroll, and 
personal finance solutions to individuals and small businesses. Intuit 
offers DDIY tax preparation products under the TurboTax brand. 
Approximately 41 million individuals filed individual federal tax 
returns in 2020 using TurboTax. Intuit, through its TurboTax business, 
is the largest provider of DDIY tax preparation products for U.S. 
federal and state tax returns. In 2019, Intuit earned over $6.5 billion 
in revenue, including over $2.5 billion from sales of TurboTax 
products.

[[Page 81503]]

    15. Credit Karma is a privately-held technology company based in 
San Francisco, California that offers an online and mobile personal 
finance platform. Credit Karma's platform provides individuals with 
access to free credit scores, credit monitoring, and DDIY tax 
preparation, among other products and services. Credit Karma is home to 
more than one hundred million customers, and in any given month, over 
thirty-five million customers are actively engaged on the Credit Karma 
platform. Credit Karma's DDIY tax preparation business, known as Credit 
Karma Tax, is the fifth-largest provider of DDIY tax preparation 
products for U.S. federal and state tax returns. Approximately two 
million individuals filed U.S. federal tax returns with Credit Karma 
Tax in 2020.

IV. The Relevant Market

A. Relevant Product Market

    16. Intuit and Credit Karma compete to develop, provide, operate, 
and support DDIY tax preparation products that help individuals file 
U.S. federal and state tax returns (``DDIY tax preparation products'') 
to millions of Americans. DDIY tax preparation products enable 
individuals to prepare their own U.S. federal and state tax returns on 
the provider's website or mobile application or using the provider's 
software installed on a personal computer. The development, provision, 
operation, and support of DDIY tax preparation products is a relevant 
product market and line of commerce under Section 7 of the Clayton Act, 
15 U.S.C. 18.
    17. A hypothetical monopolist would impose at least a small but 
significant and non-transitory increase in the price of DDIY tax 
preparation products. Such a price increase for these products would 
not be defeated by substitution to alternative products. Other methods 
of preparing individual U.S. federal or state income tax returns are 
not close substitutes for DDIY tax preparation products because those 
methods of tax preparation do not offer comparable functionality or are 
less convenient, more cumbersome, or more expensive. For example, 
hiring an accountant--i.e., ``assisted tax preparation''--is 
substantially more expensive and less convenient than using DDIY tax 
preparation products. Similarly, completing U.S. federal and state tax 
returns manually using the ``pen-and-paper'' method is a substantially 
more tedious and error-prone process and thus less efficient than using 
DDIY tax preparation products.

B. Relevant Geographic Market

    18. The DDIY tax preparation products that Intuit and Credit Karma 
offer assist individuals with filing their U.S. federal and state 
income tax returns. Customers that are required to file tax returns in 
jurisdictions outside of the United States cannot use the DDIY tax 
preparation products at issue for those purposes. Similarly, DDIY tax 
preparation products that have been designed to assist individuals with 
filing tax returns in jurisdictions outside of the United States cannot 
be used by customers to prepare U.S. federal and state tax returns. 
Both customers and suppliers of DDIY tax preparation products 
predominantly are located within the United States. However, because 
many DDIY tax preparation products are provided over the internet, 
there do not appear to be any physical restrictions on the location of 
suppliers or customers--that is, any consumer who is required to file 
U.S. taxes can generally choose between the same DDIY tax preparation 
products, regardless of whether the customer or DDIY product supplier 
is physically located inside the United States. Therefore, a worldwide 
market is a relevant geographic market within the meaning of Section 7 
of the Clayton Act, 15 U.S.C. 18 for the purposes of analyzing this 
transaction.

V. Intuit's Acquisition of Credit Karma Is Likely To Result in 
Anticompetive Effects

A. The Transaction Is Presumed Likely To Enhance Intuit's Market Power 
and Substantially Less Competition

    19. The relevant market is highly concentrated and would become 
significantly more concentrated as a result of the proposed 
transaction. The more concentrated a market and the more a transaction 
increases concentration in that market, the more likely it is that the 
transaction will reduce competition. Concentration is typically 
measured by market shares and by the well-recognized Herfindahl-
Hirschman Index (HHI). If the post-transaction HHI would be more than 
2,500 and the change in HHI more than 200, the transaction is presumed 
likely to enhance market power and substantially lessen competition. 
See, e.g., United States v. Anthem, Inc., 855 F.3d 345, 349 (D.C. Cir. 
2017).
    20. In 2020, approximately 41 million individuals filed a federal 
tax return using Intuit's TurboTax, accounting for about 66% of the 
total market for DDIY tax preparation products. During the same time 
period, approximately two million individuals filed a federal tax 
return using Credit Karma's DDIY tax preparation product, accounting 
for about 3% of the total market. H&R Block, the second-largest 
provider of DDIY tax preparation products, has about a 15% market 
share. The post-transaction HHI would be over 5,000, with an increase 
in excess of 400. Given the high concentration level and increases in 
concentration in the market for DDIY tax preparation products, the 
proposed acquisition presumptively violates Section 7 of the Clayton 
Act.
    21. These concentration measures understate the likely 
anticompetitive effects of the transaction. Because Credit Karma is the 
only competitor that provides DDIY tax preparation products for free to 
consumers regardless of the complexity of the federal tax return or 
state tax return required, it plays a uniquely disruptive role in the 
market. Further, Credit Karma is poised to continue with substantial 
growth in the near- and long-term.

B. The Transaction Would Eliminate Head-to-Head Competition Between 
Intuit and Credit Karma and an Important Competitive Constraint

    22. Intuit's acquisition of Credit Karma would remove a significant 
competitor that has been an important competitive constraint on Intuit. 
Intuit's TurboTax offers consumers a limited free option for simple 
individual federal tax filings, but it charges consumers fees for more 
complicated federal tax filings, including filings with itemized 
deductions, investment income, and self-employed income and expenses. 
Intuit also charges consumers fees for their state tax filings. Unlike 
Intuit, Credit Karma does not charge consumers for any of the products 
and services that it offers. Instead, Credit Karma uses the data that 
it collects from users to create targeted offers on financial products 
and services and collects a commission from financial institutions when 
users accept these offers. In addition, Credit Karma has an existing 
customer base of over a hundred million users that it can cost-
effectively target for DDIY tax preparation products.
    23. Intuit and Credit Karma compete head-to-head to provide DDIY 
tax preparation products to tens of millions of Americans. This head-
to-head competition has led to lower prices and increased quality for 
DDIY tax preparation products. In response to competition from Credit 
Karma, Intuit has strategically lowered prices on some of its DDIY tax 
preparation products, such as by extending promotions for free state 
tax filing with TurboTax (up to a $50 value). In addition, to compete

[[Page 81504]]

with Credit Karma, Intuit has expanded the scope and quality of 
services it offers to TurboTax users at no additional cost to 
consumers, including by granting customers free access to their prior 
year's tax returns.
    24. Moreover, without this merger, competition between Intuit and 
Credit Karma would intensify as Credit Karma continues to grow and 
erode Intuit's substantial base of TurboTax customers. Credit Karma has 
consistently and significantly grown its market share year over year 
and is forecasting continued significant growth over the next few 
years.
    25. By eliminating head-to-head competition between Intuit and 
Credit Karma, the proposed acquisition in its current form would result 
in higher prices, lower quality, and reduced choice. Thus, the merger 
would substantially lessen competition and harm millions of consumers 
in the development, provision, operation, and support of DDIY tax 
preparation products.

VI. Absence of Countervailing Factors

    26. New entry and expansion by competitors likely will not be 
timely and sufficient in scope to prevent the acquisition's likely 
anticompetitive effects. Apart from Credit Karma, no other companies 
have successfully entered the market for the development, provision, 
operation, and support of DDIY tax preparation products in over a 
decade. As Intuit's and Credit Karma's executives have recognized, 
barriers to entry are high. Barriers to entry and expansion include (i) 
large sunk costs and significant other expenditures to develop easy-to-
use, robust DDIY tax preparation products; (ii) significant time and 
expense to build a trusted brand; and (iii) substantial marketing 
dollars and effort to promote the DDIY tax preparation products and 
attract customers.
    27. The proposed acquisition is unlikely to generate verifiable, 
merger-specific efficiencies sufficient to reverse or outweigh the 
anticompetitive effects that are likely to occur.

VII. Violation Alleged

    28. The United States hereby incorporates the allegations of 
paragraphs 1 through 27 above as if set forth fully herein.
    29. Intuit's proposed acquisition of Credit Karma is likely to 
substantially lessen competition in the relevant market, in violation 
of Section 7 of the Clayton Act, 15 U.S.C. 18.
    30. Unless enjoined, the proposed acquisition would likely have the 
following anticompetitive effects, among others:
    (a) Eliminate present and future competition between Intuit and 
Credit Karma in the market for the development, provision, operation, 
and support of DDIY tax preparation products;
    (b) cause prices for DDIY tax preparation products to be higher 
than they would be otherwise;
    (c) lessen innovation; and
    (d) reduce quality, service, and choice for Americans that file 
U.S. federal and state tax returns.

VIII. Request for Relief

    31. The United States requests that the Court:
    (a) Adjudge Intuit's acquisition of Credit Karma to violate Section 
7 of the Clayton Act, 15 U.S.C. 18;
    (b) permanently enjoin Defendants from consummating Intuit's 
proposed acquisition of Credit Karma or from entering into or carrying 
out any other agreement, understanding, or plan by which the assets or 
businesses of Intuit and Credit Karma would be combined;
    (c) award the United States its costs of this action; and
    (d) grant the United States such other relief the Court deems just 
and proper.

Dated: November 25, 2020.

Respectfully submitted,

For Plaintiff United States:

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Makan Delrahim (D.C. #457795),
Assistant Attorney General for Antitrust.

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Michael F. Murray (D.C. #1001680),
Deputy Assistant Attorney General.

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Kathleen S. O'Neill,
Senior Director of Investigations & Litigation.

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Robert A. Lepore,
Chief, Transportation, Energy & Agriculture Section.

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Katherine A. Celeste,
Assistant Chief, Transportation, Energy & Agriculture Section.

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Brian Hanna *
Michele B. Cano
J. Richard Doidge
Rachel A. Flipse
John A. Holler
Michelle Livingston (D.C. #461269)
Michael T. Nash
Seth J. Wiener (D.C. #995383)

Attorneys for the United States

U.S. Department of Justice, Antitrust Division, 450 Fifth Street NW, 
Suite 8000, Washington, DC 20530, Tel: (202) 598-8360, Fax: (202) 616-
2441, Email: [email protected]

* Lead Attorney To Be Noticed

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Intuit Inc., and Credit 
Karma, Inc., Defendants.

Civil Action No.: 1:20-cv-03441-ABJ
Judge Amy Berman Jackson

Proposed Final Judgment

    Whereas, Plaintiff, United States of America, filed its Complaint 
on [Month, Day], 2020;
    And whereas, the United States and Defendants, Intuit Inc. 
(``Intuit'') and Credit Karma, Inc. (``Credit Karma''), have consented 
to entry of this Final Judgment without the taking of testimony, 
without trial or adjudication of any issue of fact or law, and without 
this Final Judgment constituting any evidence against or admission by 
any party regarding any issue of fact or law;
    And whereas, Defendants agree to make a divestiture to remedy the 
loss of competition alleged in the Complaint;
    And whereas, Defendants represent that the divestiture and other 
relief required by this Final Judgment can and will be made and that 
Defendants will not later raise a claim of hardship or difficulty as 
grounds for asking the Court to modify any provision of this Final 
Judgment;
    Now therefore, it is ordered, adjudged, and decreed:

I. Jurisdiction

    The Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against Defendants under Section 7 of the Clayton 
Act, as amended (15 U.S.C. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means Square or any other entity to which 
Defendants divest the Divestiture Assets.
    B. ``Intuit'' means Defendant Intuit Inc., a Delaware corporation 
with its headquarters in Mountain View, California, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``Credit Karma'' means Defendant Credit Karma, Inc., a Delaware 
corporation with its headquarters in San Francisco, California, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint

[[Page 81505]]

ventures, and their directors, officers, managers, agents, and 
employees.
    D. ``Square'' means Square, Inc., a Delaware corporation with its 
headquarters in San Francisco, California, its successors and assigns, 
and its subsidiaries, divisions, groups, affiliates, partnerships, and 
joint ventures, and their directors, officers, managers, agents, and 
employees.
    E. ``CKT'' means Credit Karma Tax, Inc., a wholly owned subsidiary 
of Credit Karma, its successors and assigns, and its subsidiaries, 
divisions, groups, affiliates, partnerships, and joint ventures, and 
their directors, officers, managers, agents, and employees.
    F. ``Divestiture Assets'' means all of Defendants' rights, titles, 
and interests in and to all property and assets, tangible and 
intangible, wherever located, related to or used or held for use in 
connection with CKT, including, but not limited to:
    1. The CKT Products;
    2. the CKT IP;
    3. the Credit Karma IP License;
    4. the Credit Karma Trademarks License;
    5. all tangible personal property, including, but not limited to, 
servers and other computer hardware; research and development 
activities; all fixed assets, personal property, inventory, office 
furniture, materials, and supplies;
    6. all contracts, contractual rights, and customer relationships; 
and all other agreements, commitments, and understandings;
    7. all licenses, permits, certifications, approvals, consents, 
registrations, waivers, and authorizations issued or granted by any 
governmental organization, and all pending applications or renewals;
    8. all records and data, including (a) customer lists, accounts, 
sales, and credit records, (b) manuals and technical information Credit 
Karma provides to its own employees, customers, suppliers, agents, or 
licensees, (c) records and research data concerning historic and 
current research and development activities, and (d) drawings, 
blueprints, and designs; and
    9. all other intangible property, including (a) commercial names 
and d/b/a names, (b) technical information, (c) computer software and 
related documentation, know-how, trade secrets, design protocols, 
quality assurance and control procedures, (d) design tools and 
simulation capabilities, and (e) rights in internet websites and 
internet domain names.
    G. ``Divestiture Date'' means the date on which the Divestiture 
Assets are divested to Acquirer.
    H. ``Acquirer's Tax Landing Page'' means the website on which 
Acquirer will provide the CKT Products and any applicable internet 
pages under such domain or sub-domain.
    I. ``CKT Actual Filers'' means customers who, at any time on or 
before October 16, 2021, have successfully electronically filed federal 
or state income tax returns using the CKT Products.
    J. ``CKT E-File Product website'' means https://tax.creditkarma.com, 
including any applicable internet pages under such domain or sub-
domain.
    K. ``CKT IP'' means all intellectual property owned by CKT.
    L. ``CKT Landing Page'' means www.creditkarma.com/tax, including 
any applicable internet pages under such domain or sub-domain.
    M. ``CKT New Member'' means any customer who either (a) creates a 
Credit Karma account via the CKT Landing Page or (b) creates a Credit 
Karma account via any internet page other than the CKT Landing Page 
and, within 24 hours of creating that Credit Karma account, provides 
Credit Karma with the additional authentication required for filing a 
U.S. federal tax return.
    N. ``CKT Product Link'' means any link, advertisement, reference to 
tax or tax filing (including ``file now'' or similar links) with 
respect to CKT Products, or the CKT Tax Button, on the applicable 
internet website menu banners and pages.
    O. ``CKT Products'' means all products and services, including all 
digital do-it-yourself personal United States federal or state income 
tax return preparation and e-filing products and services developed, 
manufactured, delivered, made commercially available, marketed, 
distributed, supported, sold, offered for sale, imported or exported 
for resale, or licensed out by, for, or on behalf of CKT.
    P. ``CKT Tax Button'' means (a) with respect to the Credit Karma 
website, the link that is labeled ``Tax,'' and (b) with respect to any 
CKT mobile application, the navigation element that is labeled ``Tax.''
    Q. ``Credit Karma IP'' means all intellectual property, except for 
the Credit Karma Trademarks, owned by Credit Karma that is used or held 
for use in connection with Credit Karma Products and which is embodied 
in or related to the development, provision, operation, or support of 
digital do-it-yourself personal United States federal or state income 
tax return preparation and e-filing products and services.
    R. ``Credit Karma IP License'' means a non-exclusive, worldwide, 
fully paid-up, perpetual, irrevocable, non-transferable license to the 
Credit Karma IP for Acquirer's use in the development, provision, 
operation, and support of all existing and future digital do-it-
yourself personal United States federal or state income tax return 
preparation and e-filing products and services.
    S. ``Credit Karma New Member'' means any customer who creates a 
Credit Karma account for the first time following the Divestiture Date 
and prior to the later of (a) April 16, 2021, or (b) the date of any 
federal filing deadline required by the Internal Revenue Service for 
federal income tax returns and tax payments for the tax year ending 
December 31, 2020, if such federal filing deadline is expressly 
extended beyond April 15, 2021, excluding persons who were referred to 
Credit Karma by Intuit.
    T. ``Credit Karma Products'' means all products and services, 
excluding CKT Products, provided by Defendants using the ``Credit 
Karma'' brand name.
    U. ``Credit Karma Trademarks'' means all trademarks, service marks, 
internet domain names, trade dress, trade names, other names, or source 
identifiers, including all such registrations, applications for 
registrations, and associated goodwill, owned by Credit Karma that is 
used or held for use in connection with Credit Karma Products and which 
is embodied in or related to the development, provision, operation, or 
support of digital do-it-yourself personal United States federal or 
state income tax return preparation and e-filing products and services.
    V. ``Credit Karma Trademarks License'' means a limited, non-
exclusive, non-transferrable, non-assignable, non-sublicensable license 
to the Credit Karma Trademarks for Acquirer's use in the development, 
provision, operation, and support of all existing and future digital 
do-it-yourself personal United States federal or state income tax 
return preparation and e-filing products and services during the Year 1 
Period.
    W. ``Credit Karma website'' means www.creditkarma.com and any 
applicable internet pages under such domain or sub-domain.
    X. ``Other Tax Product'' means, except for the Divestiture Assets, 
any digital do-it-yourself personal United States federal or state 
income tax return preparation and e-filing product or service, 
including, but not limited to, Intuit's TurboTax.
    Y. ``Protected User'' means any person who is a CKT Actual Filer, a 
Tax Intent User, or a Credit Karma New Member.
    Z. ``Relevant Personnel'' means:

[[Page 81506]]

    1. All full-time, part-time, or contract employees of CKT at any 
time between February 24, 2020, and the Divestiture Date; and
    2. all full-time, part-time, or contract employees of Credit Karma, 
wherever located, who dedicated at least 50% of such person's time to 
the development, provision, operation, or support of the digital do-it-
yourself personal United States federal or state income tax return 
preparation and e-filing products and services at any time between 
October 1, 2019, and September 30, 2020.
    The United States, in its sole discretion, will resolve any 
disagreement regarding which employees are Relevant Personnel.
    AA. ``Tax Intent User'' means any customer (a) in the case of a 
user of the Credit Karma website, (i) who clicks on a CKT Product Link, 
(ii) who accesses the CKT Tax Landing Page or the CKT E-File Product 
website, or (iii) who accesses the Credit Karma website, CKT Tax 
Landing Page, or CKT E-File Product website through a link provided 
through electronic mail or other notifications sent by Defendants on 
behalf of Acquirer or otherwise pursuant to Paragraph IV.M.1. or 
through other promotional or marketing materials distributed or made 
available by Acquirer, and (b) in the case of a user of the Credit 
Karma mobile application, (i) who clicks on a CKT Product Link or (ii) 
who accesses the application through a link provided through electronic 
mail or other notifications sent by Defendants on behalf of Acquirer or 
otherwise pursuant to Paragraph IV.M.1. or through other promotional or 
marketing materials distributed or made available by Acquirer.
    BB. ``Year 1 Period'' means the period beginning on the Divestiture 
Date and ending on October 16, 2021.
    CC. ``Year 2 Period'' means the period beginning on October 17, 
2021, and ending on the later of (a) June 14, 2022, or (b) 60 calendar 
days following any extension of the federal filing deadline required by 
the Internal Revenue Service for federal income tax returns and tax 
payments for the tax year ending December 31, 2021, if such federal 
filing deadline is expressly extended beyond April 15, 2022.

III. Applicability

    A. This Final Judgment applies to Intuit and Credit Karma, as 
defined above, and all other persons in active concert or participation 
with any Defendant who receive actual notice of this Final Judgment.
    B. If, prior to complying with Section IV and Section V of this 
Final Judgment, Defendants sell or otherwise dispose of all or 
substantially all of their assets or of business units that include the 
Divestiture Assets, Defendants must require any purchaser to be bound 
by the provisions of this Final Judgment. Defendants need not obtain 
such an agreement from Acquirer.

IV. Divestiture

    A. Defendants are ordered and directed, within 30 calendar days 
after the Court's entry of the Asset Preservation Stipulation and Order 
in this matter, to divest the Divestiture Assets in a manner consistent 
with this Final Judgment to Square or to another Acquirer acceptable to 
the United States, in its sole discretion. The United States, in its 
sole discretion, may agree to one or more extensions of this time 
period not to exceed 60 calendar days in total and will notify the 
Court of any extensions.
    B. Defendants must use their best efforts to divest the Divestiture 
Assets as expeditiously as possible and may not take any action to 
impede the certification, operation, or divestiture of the Divestiture 
Assets.
    C. Unless the United States otherwise consents in writing, 
divestiture pursuant to this Final Judgment must include the entire 
Divestiture Assets and must be accomplished in such a way as to satisfy 
the United States, in its sole discretion, that the Divestiture Assets 
can and will be used by Acquirer as part of a viable, ongoing business 
of the development, provision, operation, and support of digital do-it-
yourself personal United States federal or state income tax return 
preparation and e-filing products and services, and that the 
divestiture to Acquirer will remedy the competitive harm alleged in the 
Complaint.
    D. The divestiture must be made to an Acquirer that, in the United 
States' sole judgment, has the intent and capability (including the 
necessary managerial, operational, technical, and financial capability) 
to compete effectively in the development, provision, operation, and 
support of digital do-it-yourself personal United States federal or 
state income tax return preparation and e-filing products and services.
    E. The divestiture must be accomplished so as to satisfy the United 
States, in its sole discretion, that none of the terms of any agreement 
between Acquirer and Defendants gives Defendants the ability 
unreasonably to raise Acquirer's costs, to lower Acquirer's efficiency, 
or otherwise to interfere in the ability of Acquirer to compete 
effectively.
    F. In the event Defendants are attempting to divest the Divestiture 
Assets to an Acquirer other than Square, Defendants promptly must make 
known, by usual and customary means, the availability of the 
Divestiture Assets. Defendants must inform any person making an inquiry 
regarding a possible purchase of the Divestiture Assets that the 
Divestiture Assets are being divested in accordance with this Final 
Judgment and must provide that person with a copy of this Final 
Judgment. Defendants must offer to furnish to all prospective 
Acquirers, subject to customary confidentiality assurances, all 
information and documents relating to the Divestiture Assets that are 
customarily provided in a due-diligence process; provided, however, 
that Defendants need not provide information or documents subject to 
the attorney-client privilege or work-product doctrine. Defendants must 
make all information and documents available to the United States at 
the same time that the information and documents are made available to 
any other person.
    G. Defendants must provide prospective Acquirers with (1) access to 
make inspections of the Divestiture Assets; (2) access to all 
environmental, zoning, and other permitting documents and information; 
and (3) access to all financial, operational, or other documents and 
information customarily provided as part of a due diligence process. 
Defendants also must disclose all encumbrances on any part of the 
Divestiture Assets, including on intangible property.
    H. Defendants must cooperate with and assist Acquirer to identify 
and hire all Relevant Personnel.
    1. Within 10 business days following the filing of the Complaint in 
this matter, Defendants must identify all Relevant Personnel to 
Acquirer and the United States, including by providing organization 
charts covering all Relevant Personnel.
    2. Within 10 business days following receipt of a request by 
Acquirer, the United States, or the monitoring trustee, Defendants must 
provide to Acquirer, the United States, and the monitoring trustee 
additional information related to Relevant Personnel, name, job title, 
reporting relationships, past experience, responsibilities, training 
and educational history, relevant certifications, and job performance 
evaluations. Defendants must also provide to Acquirer current, recent, 
and accrued compensation and benefits, including most recent bonus 
paid, aggregate annual compensation, current target or guaranteed 
bonus, if any, any

[[Page 81507]]

retention agreement or incentives, and any other payments due, 
compensation or benefits accrued, or promises made to the Relevant 
Personnel. If Defendants are barred by any applicable law from 
providing any of this information, Defendants must provide, within 10 
business days following receipt of the request, the requested 
information to the full extent permitted by law and also must provide a 
written explanation of Defendants' inability to provide the remaining 
information.
    3. At the request of Acquirer, Defendants must promptly make 
Relevant Personnel available for private interviews with Acquirer 
during normal business hours at a mutually agreeable location.
    4. Defendants must not interfere with any effort by Acquirer to 
employ any Relevant Personnel. Interference includes, offering to 
increase the compensation or benefits of Relevant Personnel unless the 
offer is part of a company-wide increase in compensation or benefits 
granted that was announced prior to February 24, 2020, or has been 
approved by the United States, in its sole discretion. Defendants' 
obligations under this Paragraph IV.H.4. will expire 12 months after 
the divestiture of the Divestiture Assets pursuant to this Final 
Judgment.
    5. For Relevant Personnel who elect employment with Acquirer within 
12 months of the Divestiture Date, Defendants must waive all non-
compete and non-disclosure agreements, vest and pay on a prorated basis 
any bonuses, incentives, other salary, benefits, or other compensation 
fully or partially accrued at the time of transfer to Acquirer; vest 
all unvested pension and other equity rights; and provide all other 
benefits that those Relevant Personnel otherwise would have been 
provided had the Relevant Personnel continued employment with 
Defendants, including, any retention bonuses or payments. Defendants 
may maintain reasonable restrictions on disclosure by Relevant 
Personnel of Defendants' proprietary non-public information that is 
unrelated to the Divestiture Assets and not otherwise required to be 
disclosed by this Final Judgment.
    6. For a period of 12 months from the date on which any Relevant 
Personnel is hired by Acquirer, Defendants may not solicit to rehire 
Relevant Personnel who were hired by Acquirer within 12 months of the 
Divestiture Date unless (a) an individual is terminated or laid off by 
Acquirer or (b) Acquirer agrees in writing that Defendants may solicit 
to rehire that individual. Nothing in this Paragraph IV.H.6. prohibits 
Defendants from advertising employment openings using general 
solicitations or advertisements and rehiring Relevant Personnel who 
apply for an employment opening through a general solicitation or 
advertisement.
    I. Defendants must warrant to Acquirer that (1) the Divestiture 
Assets will be operational and without material defect on the date of 
their transfer to Acquirer; (2) there are no material defects in the 
environmental, zoning, or other permits pertaining to the operation of 
the Divestiture Assets; and (3) Defendants have disclosed all 
encumbrances on any part of the Divestiture Assets, including on 
intangible property. Following the sale of the Divestiture Assets, 
Defendants must not undertake, directly or indirectly, challenges to 
the environmental, zoning, or other permits pertaining to the operation 
of the Divestiture Assets.
    J. Defendants must assign, subcontract, or otherwise transfer all 
contracts, agreements, and customer relationships (or portions of such 
contracts, agreements, and customer relationships) included in the 
Divestiture Assets, including all supply and sales contracts, to 
Acquirer; provided, however, that for any contract or agreement that 
requires the consent of another party to assign, subcontract, or 
otherwise transfer, Defendants must use best efforts to accomplish the 
assignment, subcontracting, or transfer. Defendants must not interfere 
with any negotiations between Acquirer and a contracting party.
    K. Defendants must make best efforts to assist Acquirer to obtain 
all necessary licenses, registrations, certifications, and permits to 
operate the Divestiture Assets. Until Acquirer obtains the necessary 
licenses, registrations, certifications, and permits, Defendants must 
provide Acquirer with the benefit of Defendants' licenses, 
registrations, certifications, and permits to the full extent 
permissible by law.
    L. At the option of Acquirer, and subject to approval by the United 
States in its sole discretion, on or before the Divestiture Date, 
Defendants must enter into a transition services agreement for 
engineering, product support, data migration, information security, 
information technology, technology infrastructure, customer support, 
marketing, finance, accounting, and knowledge-transfer related to the 
tax industry, for a period of up to 24 months on terms and conditions 
reasonably related to market conditions for the provision of the 
transition services. Any amendments to or modifications of any 
provision of a transition services agreement are subject to approval by 
the United States, in its sole discretion. Acquirer may terminate a 
transition services agreement, or any portion of a transition services 
agreement, without penalty at any time upon commercially reasonable 
notice. The employee(s) of Defendants tasked with providing transition 
services must not share any competitively sensitive information of 
Acquirer with any other employee of Defendants.
    M. For the duration of the Year 1 Period Defendants:
    1. Must distribute Acquirer-created marketing content to CKT Actual 
Filers via electronic mail and mobile application notifications, with 
the same frequency of distribution as CKT-created marketing content for 
the 12 months prior to the Divestiture Date;
    2. must continue to make the CKT mobile application available 
through the same mobile application distribution channels as for the 12 
months prior to the Divestiture Date;
    3. must use reasonable best efforts to support Acquirer's efforts 
to obtain consents of customers under Section 7216 of the Internal 
Revenue Code and Treasury Regulations thereunder;
    4. must continue to make the CKT Products available to customers at 
all times with at least the same level of quality, functionality, 
availability, access, and customer support as was provided by 
Defendants during the 12 months prior to the Divestiture Date;
    5. (a) must cause any person who clicks on a CKT Product Link or 
accesses the CKT Landing Page or CKT E-File Product website to be 
directed to the CKT Products, and (b) must not (i) direct or cause to 
be directed any person who clicks on a CKT Product Link or accesses the 
CKT Landing Page or CKT E-File Product website to any Other Tax 
Product, or (ii) show any person who clicks on a CKT Product Link or 
accesses the CKT Landing Page or CKT E-File Product website any links 
to or advertisements for any Other Tax Product;
    6. must not market, provide any links to, or otherwise make 
available Other Tax Products on the Credit Karma website or mobile 
application, including the CKT Landing Page, to any user of the Credit 
Karma website or mobile application who (a) is not logged in to the 
Credit Karma website or mobile application or (b) is a Protected User; 
and
    7. to the extent Defendants market, provide any links to, or 
otherwise make available Other Tax Products on the Credit Karma website 
or mobile application, including the CKT Landing Page, to any user of 
the Credit Karma website or mobile application who is

[[Page 81508]]

both (a) logged in to the Credit Karma website or mobile application 
and (b) not a Protected User, Defendants must also market the CKT 
Products on equal and non-discriminatory terms and in a manner that 
does not reduce the efficacy or prominence of the CKT Tax Button and is 
not otherwise inconsistent with the terms of Section IV.
    N. For the duration of the Year 2 Period, Defendants:
    1. Must distribute Acquirer-created marketing content to CKT Actual 
Filers via up to 6 electronic mail and mobile application 
notifications; and
    2. (a) must cause any CKT Actual Filers who click on a CKT Product 
Link or access the CKT Landing Page or CKT E-File Product website to be 
directed to the Acquirer's Tax Landing Page, and (b) without first 
verifying that a person is not a CKT Actual Filer or Credit Karma New 
Member, must not (i) direct or cause to be directed any person who 
clicks on a CKT Product Link or accesses the CKT Landing Page or CKT E-
File Product website to any Other Tax Product, or (ii) show any person 
who clicks on a CKT Product Link or accesses the CKT Landing Page or 
CKT E-File Product website any links to or advertisements for any Other 
Tax Product.
    O. For the duration of both the Year 1 Period and the Year 2 
Period, Defendants:
    1. Must maintain the CKT Tax Button; and
    2. must not market or promote to any CKT Actual Filers any products 
or services that compete, either directly or indirectly, with the CKT 
Products, via electronic mail marketing that is (a) deliberately 
directed at such CKT Actual Filers based on their statuses as CKT 
Actual Filers or (b) delivered to CKT Actual Filers at the email 
addresses associated with such CKT Actual Filers' accounts with Credit 
Karma.
    P. Unless Acquirer directs Defendants to retain such data for a 
longer period, and except as required in Paragraph IV.Q., within 30 
calendar days after the Divestiture Date, Defendants must delete any 
data collected from or provided by CKT Actual Filers during the tax 
preparation or filing process that Credit Karma has in its possession, 
including, but not limited to, (a) any such data CKT has provided to 
Credit Karma pursuant to the consent of customers under Section 7216 of 
the Internal Revenue Code and Treasury Regulations thereunder and (b) 
any such data indicating whether a CKT Actual Filer is a CKT New 
Member. If Acquirer directs Defendants to retain such data for a longer 
period, Defendants must delete such data within 30 calendar days after 
Acquirer directs Defendants to delete such data. Within 5 calendar days 
of Defendants' deletion of this data, Defendants must (i) provide to 
the United States and to the monitoring trustee a written 
certification, signed by Defendants' respective General Counsels, that 
all data covered by this Paragraph IV.P. has been deleted and is no 
longer in the possession or control of Defendants and (ii) provide a 
copy of such certification to Acquirer.
    Q. Defendants may maintain information to indicate whether a 
customer is a CKT Actual Filer solely for the purpose of complying with 
Paragraphs IV.L., IV.M., IV.N., IV.O., and IV.P. Within 10 calendar 
days following the end of the Year 2 Period, Defendants must delete (a) 
the data that Defendants maintain for purposes of complying with 
Paragraphs IV.L., IV.M., IV.N., IV.O., and IV.P. and which identify a 
customer as a CKT Actual Filer and (b) any remaining data that 
Defendants possess that could be used to identify a customer as a CKT 
Actual Filer or as a CKT New Member, including any data described in 
Paragraph IV.P. Within 5 calendar days of Defendants' deletion of this 
data, Defendants must (i) provide to the United States and to the 
monitoring trustee a written certification, signed by Defendants' 
respective General Counsels, that all data covered by this Paragraph 
IV.Q. has been deleted and is no longer in the possession or control of 
Defendants, and (ii) provide a copy of such certification to Acquirer.
    R. If any term of an agreement between Defendants and Acquirer, 
including, but not limited to, an agreement to effectuate the 
divestiture required by this Final Judgment, varies from a term of this 
Final Judgment, to the extent that Defendants cannot fully comply with 
both, this Final Judgment determines Defendants' obligations.

V. Appointment of Divestiture Trustee

    A. If Defendants have not divested the Divestiture Assets within 
the period specified in Paragraph IV.A., Defendants must immediately 
notify the United States of that fact in writing. Upon application of 
the United States, which Defendants may not oppose, the Court will 
appoint a divestiture trustee selected by the United States and 
approved by the Court to effect the divestiture of the Divestiture 
Assets.
    B. After the appointment of a divestiture trustee by the Court, 
only the divestiture trustee will have the right to sell the 
Divestiture Assets. The divestiture trustee will have the power and 
authority to accomplish the divestiture to an Acquirer acceptable to 
the United States, in its sole discretion, at a price and on terms as 
are then obtainable upon reasonable effort by the divestiture trustee, 
subject to the provisions of Sections IV, V, and VI of this Final 
Judgment, and will have other powers as the Court deems appropriate. 
The divestiture trustee must sell the Divestiture Assets as quickly as 
possible.
    C. Defendants may not object to a sale by the divestiture trustee 
on any ground other than malfeasance by the divestiture trustee. 
Objections by Defendants must be conveyed in writing to the United 
States and the divestiture trustee within 10 calendar days after the 
divestiture trustee has provided the notice of proposed divestiture 
required under Section VI.
    D. The divestiture trustee will serve at the cost and expense of 
Defendants pursuant to a written agreement, on terms and conditions, 
including confidentiality requirements and conflict of interest 
certifications, that are approved by the United States.
    E. The divestiture trustee may hire at the cost and expense of 
Defendants any agents or consultants, including, but not limited to, 
investment bankers, attorneys, and accountants, that are reasonably 
necessary in the divestiture trustee's judgment to assist with the 
divestiture trustee's duties. These agents or consultants will be 
accountable solely to the divestiture trustee and will serve on terms 
and conditions, including terms and conditions governing 
confidentiality requirements and conflict-of-interest certifications, 
that are approved by the United States in its sole discretion.
    F. The compensation of the divestiture trustee and agents or 
consultants hired by the divestiture trustee must be reasonable in 
light of the value of the Divestiture Assets and based on a fee 
arrangement that provides the divestiture trustee with incentives based 
on the price and terms of the divestiture and the speed with which it 
is accomplished. If the divestiture trustee and Defendants are unable 
to reach agreement on the divestiture trustee's compensation or other 
terms and conditions of engagement within 14 calendar days of the 
appointment of the divestiture trustee by the Court, the United States 
may, in its sole discretion, take appropriate action, including by 
making a recommendation to the Court. Within three business days of 
hiring an agent or consultant, the divestiture trustee must provide 
written notice of the hiring and rate of compensation to Defendants and 
the United States.

[[Page 81509]]

    G. The divestiture trustee must account for all monies derived from 
the sale of the Divestiture Assets sold by the divestiture trustee and 
all costs and expenses incurred. Within 30 calendar days of the date of 
the sale of the Divestiture Assets, the divestiture trustee must submit 
that accounting to the Court for approval. After approval by the Court 
of the divestiture trustee's accounting, including fees for unpaid 
services and those of agents or consultants hired by the divestiture 
trustee, all remaining money must be paid to Defendants and the trust 
will then be terminated.
    H. Defendants must use their best efforts to assist the divestiture 
trustee to accomplish the required divestiture. Subject to reasonable 
protection for trade secrets, other confidential research, development, 
or commercial information, or any applicable privileges, Defendants 
must provide the divestiture trustee and agents or consultants retained 
by the divestiture trustee with full and complete access to all 
personnel, books, records, and facilities of the Divestiture Assets. 
Defendants also must provide or develop financial and other information 
relevant to the Divestiture Assets that the divestiture trustee may 
reasonably request. Defendants may not take any action to interfere 
with or to impede the divestiture trustee's accomplishment of the 
divestiture.
    I. The divestiture trustee must maintain complete records of all 
efforts made to sell the Divestiture Assets, including by filing 
monthly reports with the United States setting forth the divestiture 
trustee's efforts to accomplish the divestiture ordered by this Final 
Judgment. The reports must include the name, address, and telephone 
number of each person who, during the preceding month, made an offer to 
acquire, expressed an interest in acquiring, entered into negotiations 
to acquire, or was contacted or made an inquiry about acquiring any 
interest in the Divestiture Assets and must describe in detail each 
contact with any such person.
    J. If the divestiture trustee has not accomplished the divestiture 
ordered by this Final Judgment within six months of appointment, the 
divestiture trustee must promptly provide the United States with a 
report setting forth: (1) The divestiture trustee's efforts to 
accomplish the required divestiture; (2) the reasons, in the 
divestiture trustee's judgment, why the required divestiture has not 
been accomplished; and (3) the divestiture trustee's recommendations 
for completing the divestiture. Following receipt of that report, the 
United States may make additional recommendations consistent with the 
purpose of the trust to the Court. The Court thereafter may enter such 
orders as it deems appropriate to carry out the purpose of this Final 
Judgment, which may include extending the trust and the term of the 
divestiture trustee's appointment by a period requested by the United 
States.
    K. The divestiture trustee will serve until divestiture of all 
Divestiture Assets is completed or for a term otherwise ordered by the 
Court.
    L. If the United States determines that the divestiture trustee is 
not acting diligently or in a reasonably cost-effective manner, the 
United States may recommend that the Court appoint a substitute 
divestiture trustee.

VI. Notice of Proposed Divestiture

    A. Within two business days following execution of a definitive 
divestiture agreement, Defendants or the divestiture trustee, whichever 
is then responsible for effecting the divestiture, must notify the 
United States of a proposed divestiture required by this Final 
Judgment. If the divestiture trustee is responsible for completing the 
divestiture, the divestiture trustee also must notify Defendants. The 
notice must set forth the details of the proposed divestiture and list 
the name, address, and telephone number of each person not previously 
identified who offered or expressed an interest in or desire to acquire 
any ownership interest in the Divestiture Assets.
    B. Within 15 calendar days of receipt by the United States of this 
notice, the United States may request from Defendants, the proposed 
Acquirer, other third parties, or the divestiture trustee additional 
information concerning the proposed divestiture, the proposed Acquirer, 
and other prospective Acquirers. Defendants and the divestiture trustee 
must furnish the additional information requested within 15 calendar 
days of the receipt of the request unless the United States provides 
written agreement to a different period.
    C. Within 45 calendar days after receipt of the notice required by 
Paragraph VI.A. or within 20 calendar days after the United States has 
been provided the additional information requested pursuant to 
Paragraph VI.B., whichever is later, the United States will provide 
written notice to Defendants and any divestiture trustee that states 
whether or not the United States, in its sole discretion, objects to 
Acquirer or any other aspect of the proposed divestiture. Without 
written notice that the United States does not object, a divestiture 
may not be consummated. If the United States provides written notice 
that it does not object, the divestiture may be consummated, subject 
only to Defendants' limited right to object to the sale under Paragraph 
V.C. of this Final Judgment. Upon objection by Defendants pursuant to 
Paragraph V.C., a divestiture by the divestiture trustee may not be 
consummated unless approved by the Court.
    D. No information or documents obtained pursuant to this Section VI 
may be divulged by the United States to any person other than an 
authorized representative of the executive branch of the United States, 
except in the course of legal proceedings to which the United States is 
a party, including grand-jury proceedings, for the purpose of 
evaluating a proposed Acquirer or securing compliance with this Final 
Judgment, or as otherwise required by law.
    E. In the event of a request by a third party for disclosure of 
information under the Freedom of Information Act, 5 U.S.C. 552, the 
Antitrust Division will act in accordance with that statute, and the 
Department of Justice regulations at 28 CFR part 16, including the 
provision on confidential commercial information, at 28 CFR 16.7. 
Persons submitting information to the Antitrust Division should 
designate the confidential commercial information portions of all 
applicable documents and information under 28 CFR 16.7. Designations of 
confidentiality expire ten years after submission, ``unless the 
submitter requests and provides justification for a longer designation 
period.'' See 28 CFR 16.7(b).
    F. If at the time that a person furnishes information or documents 
to the United States pursuant to this Section VI, that person 
represents and identifies in writing information or documents for which 
a claim of protection may be asserted under Rule 26(c)(1)(G) of the 
Federal Rules of Civil Procedure, and marks each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(1)(G) of 
the Federal Rules of Civil Procedure,'' the United States must give 
that person ten calendar days' notice before divulging the material in 
any legal proceeding (other than a grand-jury proceeding).

VII. Financing

    Defendants may not finance all or any part of Acquirer's purchase 
of all or part of the Divestiture Assets made pursuant to this Final 
Judgment.

[[Page 81510]]

VIII. Asset Preservation Obligations

    Until the divestiture required by this Final Judgment has been 
accomplished, Defendants must take all steps necessary to comply with 
the Asset Preservation Stipulation and Order entered by the Court. 
Defendants must take no action that would jeopardize the divestiture 
ordered by the Court.

IX. Affidavits

    A. Within 20 calendar days of the filing of the Complaint in this 
matter, and every 30 calendar days thereafter until the divestiture 
required by this Final Judgment has been completed, Defendants each 
must deliver to the United States an affidavit, signed by each 
Defendant's Chief Financial Officer and General Counsel, describing the 
fact and manner of Defendants' compliance with this Final Judgment. The 
United States, in its sole discretion, may approve different 
signatories for the affidavits.
    B. Each affidavit must include: (1) The name, address, and 
telephone number of each person who, during the preceding 30 calendar 
days, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, an interest in the Divestiture Assets and 
describe in detail each contact with such persons during that period; 
(2) a description of the efforts Defendants have taken to solicit 
buyers for and complete the sale of the Divestiture Assets and to 
provide required information to prospective Acquirers; and (3) a 
description of any limitations placed by Defendants on information 
provided to prospective Acquirers. Objection by the United States to 
information provided by Defendants to prospective Acquirers must be 
made within 14 calendar days of receipt of the affidavit, except that 
the United States may object at any time if the information set forth 
in the affidavit is not true or complete.
    C. Defendants must keep all records of any efforts made to divest 
the Divestiture Assets until one year after the divestiture has been 
completed.
    D. Within 20 calendar days of the filing of the Complaint in this 
matter, Defendants also must each deliver to the United States an 
affidavit signed by each Defendant's Chief Financial Officer and 
General Counsel, that describes in reasonable detail all actions 
Defendants have taken and all steps Defendants have implemented on an 
ongoing basis to comply with Section VIII of this Final Judgment. The 
United States, in its sole discretion, may approve different 
signatories for the affidavits.
    E. If Defendants make any changes to the efforts and actions 
outlined in any earlier affidavits provided pursuant to Paragraph 
IX.D., Defendants must, within 15 calendar days after any change is 
implemented, deliver to the United States an affidavit describing those 
changes.
    F. Defendants must keep all records of any efforts made to preserve 
the Divestiture Assets until one year after the divestiture has been 
completed.

X. Appointment of Monitoring Trustee

    A. Upon motion of the United States, which Defendants cannot 
oppose, the Court will appoint a monitoring trustee selected by the 
United States and approved by the Court.
    B. The monitoring trustee will have the power and authority to 
monitor Defendants' compliance with the terms of this Final Judgment 
and the Asset Preservation Stipulation and Order entered by the Court 
and will have other powers as the Court deems appropriate. The 
monitoring trustee will have no responsibility or obligation for 
operation of the Divestiture Assets.
    C. Defendants may not object to actions taken by the monitoring 
trustee in fulfillment of the monitoring trustee's responsibilities 
under any Order of the Court on any ground other than malfeasance by 
the monitoring trustee. Objections by Defendants must be conveyed in 
writing to the United States and the monitoring trustee within 10 
calendar days of the monitoring trustee's action that gives rise to 
Defendants' objection.
    D. The monitoring trustee will serve at the cost and expense of 
Defendants pursuant to a written agreement with Defendants and on terms 
and conditions, including terms and conditions governing 
confidentiality requirements and conflict of interest certifications, 
that are approved by the United States.
    E. The monitoring trustee may hire, at the cost and expense of 
Defendants, any agents and consultants, including, but not limited to, 
investment bankers, attorneys, and accountants, that are reasonably 
necessary in the monitoring trustee's judgment to assist with the 
monitoring trustee's duties. These agents or consultants will be solely 
accountable to the monitoring trustee and will serve on terms and 
conditions, including terms and conditions governing confidentiality 
requirements and conflict-of-interest certifications, that are approved 
by the United States.
    F. The compensation of the monitoring trustee and agents or 
consultants retained by the monitoring trustee must be on reasonable 
and customary terms commensurate with the individuals' experience and 
responsibilities. If the monitoring trustee and Defendants are unable 
to reach agreement on the monitoring trustee's compensation or other 
terms and conditions of engagement within 14 calendar days of the 
appointment of the monitoring trustee, the United States, in its sole 
discretion, may take appropriate action, including by making a 
recommendation to the Court. Within three business days of hiring any 
agents or consultants, the monitoring trustee must provide written 
notice of the hiring and the rate of compensation to Defendants and the 
United States.
    G. The monitoring trustee must account for all costs and expenses 
incurred.
    H. Defendants must use their best efforts to assist the monitoring 
trustee to monitor Defendants' compliance with their obligations under 
this Final Judgment and the Asset Preservation Stipulation and Order. 
Subject to reasonable protection for trade secrets, other confidential 
research, development, or commercial information, or any applicable 
privileges, Defendants must provide the monitoring trustee and agents 
or consultants retained by the monitoring trustee with full and 
complete access to all personnel, books, records, and facilities of the 
Divestiture Assets. Defendants may not take any action to interfere 
with or to impede accomplishment of the monitoring trustee's 
responsibilities.
    I. The monitoring trustee must investigate and report on 
Defendants' compliance with this Final Judgment and the Asset 
Preservation Stipulation and Order, including ensuring Defendants' 
compliance with any transition services agreement. The monitoring 
trustee must provide periodic reports to the United States setting 
forth Defendants' efforts to comply with their obligations under this 
Final Judgment and under the Asset Preservation Stipulation and Order. 
The United States, in its sole discretion, will set the frequency of 
the monitoring trustee's reports.
    J. The monitoring trustee will serve until the divestiture of all 
Divestiture Assets pursuant to this Final Judgment or until expiration 
of any transition services agreement pursuant to Paragraph IV.L., 
whichever is later, unless the United States, in its sole discretion, 
determines a shorter period is appropriate.
    K. If the United States determines that the monitoring trustee is 
not acting diligently or in a reasonably cost-effective manner, the 
United States may

[[Page 81511]]

recommend that the Court appoint a substitute.

XI. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment or of related orders such as the Asset Preservation 
Stipulation and Order or of determining whether this Final Judgment 
should be modified or vacated, upon written request of an authorized 
representative of the Assistant Attorney General for the Antitrust 
Division, and reasonable notice to Defendants, Defendants must permit, 
from time to time and subject to legally recognized privileges, 
authorized representatives, including agents retained by the United 
States:

1. to have access during Defendants' office hours to inspect and 
copy, or at the option of the United States, to require Defendants 
to provide electronic copies of all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control 
of Defendants relating to any matters contained in this Final 
Judgment; and
2. to interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual 
counsel present, regarding such matters. The interviews must be 
subject to the reasonable convenience of the interviewee and without 
restraint or interference by Defendants.

    B. Upon the written request of an authorized representative of the 
Assistant Attorney General for the Antitrust Division, Defendants must 
submit written reports or respond to written interrogatories, under 
oath if requested, relating to any of the matters contained in this 
Final Judgment.
    C. No information or documents obtained pursuant to this Section XI 
may be divulged by the United States to any person other than an 
authorized representative of the executive branch of the United States, 
except in the course of legal proceedings to which the United States is 
a party, including grand jury proceedings, for the purpose of securing 
compliance with this Final Judgment, or as otherwise required by law.
    D. In the event of a request by a third party for disclosure of 
information under the Freedom of Information Act, 5 U.S.C. 552, the 
Antitrust Division will act in accordance with that statute, and the 
Department of Justice regulations at 28 CFR part 16, including the 
provision on confidential commercial information, at 28 CFR 16.7. 
Defendants submitting information to the Antitrust Division should 
designate the confidential commercial information portions of all 
applicable documents and information under 28 CFR 16.7. Designations of 
confidentiality expire 10 years after submission, ``unless the 
submitter requests and provides justification for a longer designation 
period.'' See 28 CFR 16.7(b).
    E. If at the time that Defendants furnish information or documents 
to the United States pursuant to this Section XI, Defendants represent 
and identify in writing information or documents for which a claim of 
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules 
of Civil Procedure, and Defendants mark each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(1)(G) of 
the Federal Rules of Civil Procedure,'' the United States must give 
Defendants 10 calendar days' notice before divulging the material in 
any legal proceeding (other than a grand jury proceeding).

XII. No Reacquisition; Limitations on Joint Ventures, Partnerships, or 
Collaborations

    Defendants may not reacquire any part of or any interest in the 
Divestiture Assets during the term of this Final Judgment. In addition, 
Defendants may not, without the prior written consent of the United 
States, enter into a new joint venture, partnership, or collaboration, 
including any marketing or sales agreement, or expand the scope of an 
existing joint venture, partnership, or collaboration with Acquirer 
involving any digital do-it-yourself tax return preparation and e-
filing products and services during the term of this Final Judgment. 
The decision whether to consent to any joint venture, partnership, or 
collaboration is within the sole discretion of the United States.

XIII. Retention of Jurisdiction

    The Court retains jurisdiction to enable any party to this Final 
Judgment to apply to the Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIV. Enforcement of Final Judgment

    A. The United States retains and reserves all rights to enforce the 
provisions of this Final Judgment, including the right to seek an order 
of contempt from the Court. Defendants agree that in a civil contempt 
action, a motion to show cause, or a similar action brought by the 
United States regarding an alleged violation of this Final Judgment, 
the United States may establish a violation of this Final Judgment and 
the appropriateness of a remedy therefor by a preponderance of the 
evidence, and Defendants waive any argument that a different standard 
of proof should apply.
    B. This Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws and to restore the 
competition the United States alleged was harmed by the challenged 
conduct. Defendants agree that they may be held in contempt of, and 
that the Court may enforce, any provision of this Final Judgment that, 
as interpreted by the Court in light of these procompetitive principles 
and applying ordinary tools of interpretation, is stated specifically 
and in reasonable detail, whether or not it is clear and unambiguous on 
its face. In any such interpretation, the terms of this Final Judgment 
should not be construed against either party as the drafter.
    C. In an enforcement proceeding in which the Court finds that 
Defendants have violated this Final Judgment, the United States may 
apply to the Court for a one-time extension of this Final Judgment, 
together with other relief that may be appropriate. In connection with 
a successful effort by the United States to enforce this Final Judgment 
against a Defendant, whether litigated or resolved before litigation, 
that Defendant agrees to reimburse the United States for the fees and 
expenses of its attorneys, as well as all other costs including 
experts' fees, incurred in connection with that enforcement effort, 
including in the investigation of the potential violation.
    D. For a period of four years following the expiration of this 
Final Judgment, if the United States has evidence that a Defendant 
violated this Final Judgment before it expired, the United States may 
file an action against that Defendant in this Court requesting that the 
Court order: (1) Defendant to comply with the terms of this Final 
Judgment for an additional term of at least four years following the 
filing of the enforcement action; (2) all appropriate contempt 
remedies; (3) additional relief needed to ensure the Defendant complies 
with the terms of this Final Judgment; and (4) fees or expenses as 
called for by this Section XIV.

XV. Expiration of Final Judgment

    Unless the Court grants an extension, this Final Judgment will 
expire 10 years from the date of its entry, except that after five 
years from the date of its entry, this Final Judgment may be terminated 
upon notice by the United States to the Court and Defendants that the 
divestiture has been completed and the continuation of this Final 
Judgment is no longer necessary or in the public interest.

[[Page 81512]]

XVI. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including by making available to the 
public copies of this Final Judgment and the Competitive Impact 
Statement, public comments thereon, and any response to comments by the 
United States. Based upon the record before the Court, which includes 
the Competitive Impact Statement and, if applicable, any comments and 
response to comments filed with the Court, entry of this Final Judgment 
is in the public interest.


Date:------------------------------------------------------------------

[Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16]

-----------------------------------------------------------------------

United States District Judge

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Intuit Inc. and Credit 
Karma, Inc.,. Defendants

Civil Action No.: 1:20-cv-03441-ABJ
Judge Amy Jackson Berman

Competitive Impact Statement

    The United States of America, under Section 2(b) of the Antitrust 
Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA'' or ``Tunney 
Act''), files this Competitive Impact Statement relating to the 
proposed Final Judgment submitted for entry in this civil antitrust 
proceeding.

I. Nature and Purpose of the Proceeding

    On February 24, 2020, Defendant Intuit Inc. (``Intuit'') agreed to 
acquire Defendant Credit Karma, Inc. (``Credit Karma'') for 
approximately $7.1 billion. The United States filed a civil antitrust 
Complaint against Intuit and Credit Karma on November 25, 2020, seeking 
to enjoin the proposed transaction (Docket No. 1). The Complaint 
alleges that the likely effect of the proposed transaction would be to 
substantially lessen competition for digital do-it-yourself (``DDIY'') 
tax preparation products used to help individuals file U.S. federal and 
state tax returns, in violation of Section 7 of the Clayton Act, 15 
U.S.C. 18.
    At the same time the Complaint was filed, the United States filed 
an Asset Preservation and Hold Separate Stipulation and Order 
(``Stipulation and Order'') (Docket No. 2-1) and a proposed Final 
Judgment (Docket No. 2-2), which are designed to address the 
anticompetitive effects alleged in the Complaint. Under the proposed 
Final Judgment, which is explained more fully below, Credit Karma is 
required to divest its DDIY tax preparation business, known as Credit 
Karma Tax, including the assets needed to run that business.
    Under the terms of the Stipulation and Order, Defendants are 
required to take certain steps to ensure Credit Karma Tax is operated 
as a competitively independent, economically viable, and ongoing 
business concern, which will remain independent and uninfluenced by 
Defendants, and that competition is maintained during the pendency of 
the required divestiture.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment will terminate this action, except that the 
Court will retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction

    Intuit is a software company based in Mountain View, California 
that offers tax preparation, accounting, payroll, and personal finance 
solutions to individuals and businesses. Intuit offers DDIY tax 
preparation products under the TurboTax brand. Intuit, through its 
TurboTax business, is the largest provider of DDIY tax preparation 
products for U.S. federal and state returns.
    Credit Karma is a privately held technology company based in San 
Francisco, California that offers an online and mobile personal finance 
platform. Credit Karma's platform provides individuals with access to 
free credit scores, credit monitoring, and DDIY tax preparation, among 
other products and services. Credit Karma's tax business, known as 
Credit Karma Tax, is the fifth-largest provider of DDIY tax preparation 
products for U.S. federal and state returns.
    On February 24, 2020, Intuit agreed to acquire Credit Karma in a 
transaction valued at approximately $7.1 billion.

B. Anticompetitive Effects of the Proposed Transaction in the Market 
for DDIY Tax Preparation Products

    The Complaint alleges that the loss of competition in DDIY tax 
preparation products due to the proposed transaction would result in 
substantial harm to millions of U.S. taxpayers. The acquisition of a 
disruptive upstart by the dominant firm in DDIY tax preparation 
products would lead to a presumptively anticompetitive increase in 
market concentration. The Complaint further alleges that the proposed 
transaction would eliminate important head-to-head competition between 
Intuit and Credit Karma and an important constraint on Intuit in the 
market for the development, provision, operation, and support of DDIY 
tax preparation products.
1. The Relevant Market for Analyzing the Transaction's Anticompetitive 
Effects
    The Complaint alleges that the relevant market for analyzing the 
effects of the proposed acquisition is the development, provision, 
operation, and support of DDIY tax preparation products (``the market 
for DDIY tax preparation products''). DDIY tax preparation products 
enable individuals to prepare their own U.S. federal and state personal 
income taxes on the provider's website or mobile application or using 
the provider's software installed on a personal computer.
    The Complaint alleges that other methods of tax preparation, 
including hiring an accountant (i.e., ``assisted tax preparation'') and 
completing a tax return manually on paper (the ``pen-and-paper'' 
method), are not close substitutes for DDIY tax preparation products. 
Alternate methods of tax preparation do not offer comparable 
functionality or are less convenient, more cumbersome, or more 
expensive than DDIY tax preparation products. Thus, the Complaint 
alleges that a hypothetical monopolist likely would impose at least a 
small but significant and non-transitory increase in the price of DDIY 
tax preparation products. See U.S. Dep't of Justice & Fed. Trade 
Comm'n, Horizontal Merger Guidelines Sec.  4.1.1 (revised Aug. 19, 
2010) (``Merger Guidelines''), https://www.justice.gov/atr/horizontal-merger-guidelines-08192010. Other forms of tax preparation are not 
sufficiently substitutable to prevent such a price increase.
    The Complaint alleges that the relevant geographic market for 
analyzing the effects of the proposed acquisition is worldwide. All 
major providers of DDIY tax preparation products for U.S. federal and 
state tax returns and most customers of such products are located in 
the United States. DDIY tax preparation products designed for filings 
in other parts of the world are not substitutes for DDIY tax 
preparation products designed for U.S.

[[Page 81513]]

federal and state filings. Nonetheless, because many DDIY tax 
preparation products are provided over the internet, there appear to be 
no physical restrictions on the location of providers or customers of 
DDIY tax preparation products. Accordingly, the relevant geographic 
market for analyzing the proposed transaction is a worldwide market.
2. The Transaction is Presumed to Enhance Intuit's Market Power
    The proposed transaction would significantly increase market 
concentration in the market for DDIY tax preparation products. The 
Complaint alleges that Intuit has a 66% market share and Credit Karma 
has a 3% market share. Market concentration is often a useful indicator 
of the level of competitive vigor in a market and the likely 
competitive effects of an acquisition. The more concentrated a market, 
and the more a transaction would increase concentration in a market, 
the more likely it is that the transaction would result in harm to 
consumers by meaningfully reducing competition.
    Market concentration is typically measured by the Herfindahl-
Hirschman Index (``HHI''). Markets in which the HHI is above 2,500 are 
considered highly concentrated. Transactions that increase the HHI by 
more than 200 points and result in a highly concentrated market are 
presumed to be likely to enhance market power. See Merger Guidelines 
Sec.  5.3.
    Intuit's proposed acquisition of Credit Karma would further 
increase concentration in a market that is already highly concentrated, 
resulting in a post-acquisition HHI of over 5,000 points. As a result 
of the transaction, the HHI in the relevant market would increase by 
more than 400 points. These HHI measures indicate that the transaction 
is presumptively likely to enhance market power. See Merger Guidelines 
Sec.  5.3.
    As the Complaint alleges, these concentration measures understate 
the likely anticompetitive effects of the proposed transaction. As 
explained more fully in Section II.B.3 below, Credit Karma Tax has been 
a disruptive competitor in the market by offering its DDIY tax 
preparation product for free to consumers regardless of the complexity 
of their individual tax returns. Further, Credit Karma Tax is expected 
to continue to grow rapidly in the near future. Thus, current 
concentration measures in the market for DDIY tax preparation products 
understate Credit Karma Tax's competitive importance in the market.
3. The Transaction Would Eliminate Head-to-Head Competition Between 
Intuit and Credit Karma
    The Complaint alleges that Intuit and Credit Karma compete directly 
against each other to provide DDIY tax preparation products to millions 
of U.S. taxpayers. For over a decade, Intuit has been the dominant DDIY 
tax preparation products provider. In 2017, Credit Karma entered the 
market with a completely free DDIY tax preparation product for U.S. 
taxpayers. Over the last four years, Credit Karma's free tax product 
has disrupted TurboTax's dominance in the market by winning over 
customers from TurboTax. In response to the competitive threat posed by 
Credit Karma, Intuit has lowered the price of certain DDIY tax 
preparation products and expanded the scope and quality of services it 
offers to TurboTax users for free.
    Since entering the market, Credit Karma has been a disruptive 
competitor to Intuit in DDIY tax preparation. Indeed, as the Complaint 
alleges, Intuit itself has recognized that Credit Karma has been its 
most disruptive competitor within DDIY tax preparation. Unlike any 
other provider, Credit Karma offers a completely free DDIY tax 
preparation product for a broad range of simple and complex U.S. and 
state tax returns. Credit Karma is able to offer its DDIY tax 
preparation product for free because it is paid by third parties when 
it successfully markets their offers for financial products, like 
credit cards or personal loans, to its customer base of over 100 
million users. The data Credit Karma obtains from its users' tax 
filings helps Credit Karma better tailor offers for other products to 
its users. Credit Karma's users are more likely to accept tailored 
offers, which in turn, increases Credit Karma's commissions from the 
third parties.
    Absent the proposed transaction, competition between Intuit and 
Credit Karma is expected to continue to increase in the future. As the 
Complaint alleges, Credit Karma Tax has grown significantly since its 
2017 launch, serving over 2 million filers in 2020. In the coming tax 
seasons, Credit Karma Tax is expected to continue to grow and increase 
its market share, at the expense of TurboTax, as its product gains 
further traction in the market and as Credit Karma continues to improve 
and expand its tax product's functionality.
    The Complaint, therefore, alleges that by eliminating the head-to-
head competition between Intuit and Credit Karma, Intuit's proposed 
acquisition of Credit Karma would likely substantially lessen 
competition in the market for DDIY tax preparation products in 
violation of Section 7 of the Clayton Act.
4. Entry and Efficiencies Are Unlikely To Counteract the Proposed 
Transaction's Anticompetitive Effects
    As the Complaint alleges, new entry or expansion in DDIY tax 
preparation products is unlikely to prevent the acquisition's 
anticompetitive effects. Apart from Credit Karma, no other companies 
have successfully entered the market for DDIY tax preparation products 
in over a decade. There are significant barriers to entry or expansion 
in DDIY tax preparation products, including the cost of developing and 
maintaining a robust, easy-to-use product, marketing costs to acquire 
and retain customers, and the time and expense needed to build a 
strong, trusted brand.
    The Complaint also alleges that the anticompetitive effects of the 
proposed acquisition are not likely to be eliminated by any 
efficiencies the proposed acquisition may achieve.

III. Explanation of the Proposed Final Judgment

    The divestiture required by the proposed Final Judgment will remedy 
the loss of competition alleged in the Complaint by establishing an 
independent and economically viable competitor in the market for DDIY 
tax preparation products. The proposed Final Judgment requires 
Defendants, within 30 calendar days after the entry of the Stipulation 
and Order by the Court, to divest the products, intellectual property, 
and other related assets and rights that Credit Karma Tax uses to 
provide DDIY tax preparation products (collectively, the ``Divestiture 
Assets''). The Divestiture Assets must be divested to Square, Inc., or 
to another acquirer approved by the United States, in such a way as to 
satisfy the United States in its sole discretion that the Divestiture 
Assets can and will be operated as a viable, ongoing business that can 
compete effectively in the market for DDIY tax preparation products. 
Defendants must take all reasonable steps necessary to accomplish the 
divestiture quickly.
    The proposed Final Judgment includes certain provisions to protect 
the viability of the Divestiture Assets during the transition of those 
assets to the Acquirer. As explained in more detail below, the proposed 
Final Judgment requires Defendants to provide certain transition 
services during the 2021 tax filing season and restricts Defendants 
from taking certain actions that could threaten the viability

[[Page 81514]]

of the Divestiture Assets while the acquirer prepares to independently 
operate the divested business.

A. Divestiture Assets and Employees

    The proposed Final Judgment requires Defendants to divest the 
Divestiture Assets, which are defined in Paragraph II.F of the proposed 
Final Judgment. The Divestiture Assets will provide the acquirer with 
all of the assets and rights owned by or licensed to Credit Karma Tax, 
and all material assets and rights that are needed to run the Credit 
Karma Tax business in substantially the same manner as it had been run 
prior to the transfer. The Divestiture Assets include, among other 
things: All Credit Karma Tax products, including their underlying 
software and data; all intellectual property owned by Credit Karma Tax; 
all certifications and material contracts; copies of all books and 
records related to Credit Karma Tax; and copies of all marketing 
materials related to Credit Karma Tax.
    The Divestiture Assets also include a worldwide, non-exclusive, 
irrevocable, perpetual license to all other intellectual property, 
except for Credit Karma trademarks, owned by Credit Karma or its 
subsidiaries that is used by the Credit Karma Tax business. Finally, 
the Divestiture Assets include a limited, non-exclusive license to use 
the Credit Karma trademarks for the Credit Karma Tax business during 
the 2021 tax filing season.
    Further, under Paragraph IV.H of the proposed Final Judgment, the 
acquirer will, for up to 12 months after the date of the divestiture, 
have the right to hire any employees currently employed by Credit Karma 
Tax, or currently employed by Credit Karma who dedicated at least 50% 
of their total time to Credit Karma Tax at any point from October 1, 
2019 to September 30, 2020. Defendants must provide the acquirer with 
information on these employees and are prohibited from interfering with 
the acquirer's efforts to hire them.

B. Transition Services

    The proposed Final Judgment requires Defendants to provide certain 
transition services to maintain the viability and competitiveness of 
the Credit Karma Tax business during its transition to the acquirer.
    Paragraph IV.L of the proposed Final Judgment requires Defendants, 
at the acquirer's election, to enter into a transition services 
agreement, for a period of up to 24 months, for engineering, product 
support, data migration, information security, information technology, 
technology infrastructure, customer support, marketing, finance, 
accounting, and knowledge transfer related to the tax industry. Because 
the Divestiture Assets may be transferred to the acquirer during the 
2021 tax filing season, the proposed Final Judgment allows certain 
transition services to extend beyond 12 months to give the acquirer 
sufficient time to integrate the Divested Assets into its existing 
business and to ensure customers can smoothly transition from Credit 
Karma Tax to the acquirer.
    Under Paragraphs IV.M.2 and IV.M.4, for the 2021 tax filing season, 
Defendants must make the Credit Karma Tax website and mobile 
application available to consumers with the same level of 
functionality, availability, access, and customer support as Credit 
Karma provided during the year preceding the divestiture. This will 
ensure that Credit Karma Tax customers can continue to fully use these 
services when filing their 2020 tax returns, while providing the 
acquirer with the time necessary to integrate Credit Karma Tax into its 
own business and platform. For the 2021 tax filing season, Paragraph 
IV.M.1 of the proposed Final Judgment further requires Defendants to 
distribute acquirer-created marketing content to Credit Karma Tax 
filers at least as frequently as Credit Karma sent such communications 
between October 2019 and the date of the divestiture.

C. Marketing and Steering Prohibitions

    The proposed Final Judgment contains provisions that limit 
Defendants' ability to steer customers away from the acquirer's tax 
business to TurboTax while Defendants fulfill their transition services 
obligations to the acquirer. These provisions will help ensure that 
Defendants do not degrade the competitiveness of the divested business 
while they are providing the transitional services.
    For example, during the 2021 tax filing season, the proposed Final 
Judgment limits Defendants' ability to market TurboTax on the Credit 
Karma website and mobile application to certain Credit Karma users. 
During this period, Defendants may market TurboTax only to Credit Karma 
users that have not previously filed with Credit Karma Tax or shown an 
intent to use Credit Karma Tax, and only if Defendants also market 
Credit Karma Tax with equal prominence. Defendants cannot market 
TurboTax on the Credit Karma platform to any other users during this 
period. Further, during the 2021 and 2022 tax filing seasons, under 
Paragraph IV.O.2, Defendants may not directly target previous Credit 
Karma Tax filers with email marketing related to TurboTax.
    Similarly, Paragraphs IV.M.5 and IV.N.2 of the proposed Final 
Judgment limit Defendants' ability to redirect certain individuals to 
TurboTax from the Credit Karma website or mobile application. During 
the 2021 tax season, Defendants must redirect any person from the 
Credit Karma website or mobile application to the Credit Karma Tax 
website if the person has indicated an intent to use Credit Karma Tax. 
Defendants may not direct any such person to the TurboTax website. 
During the 2022 tax season, the same restrictions on redirection apply 
but only with respect to previous Credit Karma Tax filers.
    Finally, Paragraphs IV.P-Q require Defendants to delete any user 
data collected from Credit Karma Tax filers that could be used by 
Defendants to identify any users as Credit Karma Tax filers, except as 
necessary to provide transitional services to the acquirer.

D. Other Provisions

    Section XII of the proposed Final Judgment prevents Defendants from 
reacquiring any part of or interest in the Divestiture Assets during 
the term of the Final Judgment. This section further prohibits 
Defendants from entering into or expanding any new joint venture, 
partnership, or collaboration with the acquirer related to DDIY tax 
preparation products during the term of the Final Judgment without 
prior written consent from the United States.
    The proposed Final Judgment also contains provisions designed to 
promote compliance and make enforcement of the Final Judgment as 
effective as possible. Paragraph XIV.A provides that the United States 
retains and reserves all rights to enforce the proposed Final Judgment, 
including the right to seek an order of contempt from the Court. Under 
the terms of this paragraph, Defendants have agreed that in any civil 
contempt action, any motion to show cause, or any similar action 
brought by the United States regarding an alleged violation of the 
Final Judgment, the United States may establish the violation and the 
appropriateness of any remedy by a preponderance of the evidence and 
that Defendants have waived any argument that a different standard of 
proof should apply. This provision aligns the standard for compliance 
with the Final Judgment with the standard of proof that applies to the 
underlying offense that the Final Judgment addresses.
    Paragraph XIV.B provides additional clarification regarding the 
interpretation of the provisions of the proposed Final Judgment. The 
proposed Final Judgment is intended to restore competition that the 
United States alleges would

[[Page 81515]]

otherwise be harmed by the transaction. Defendants agree that they will 
abide by the proposed Final Judgment, and that they may be held in 
contempt of this Court for failing to comply with any provision of the 
proposed Final Judgment that is stated specifically and in reasonable 
detail, as interpreted in light of this procompetitive purpose.
    Paragraph XIV.C of the proposed Final Judgment provides that if the 
Court finds in an enforcement proceeding that Defendants have violated 
the Final Judgment, the United States may apply to the Court for a one-
time extension of the Final Judgment, together with such other relief 
as may be appropriate. In addition, to compensate American taxpayers 
for any costs associated with investigating and enforcing violations of 
the Final Judgment, Paragraph XIV.C provides that in any successful 
effort by the United States to enforce the Final Judgment against a 
Defendant, whether litigated or resolved before litigation, that 
Defendants will reimburse the United States for attorneys' fees, 
experts' fees, and other costs incurred in connection with any effort 
to enforce the Final Judgment, including the investigation of the 
potential violation.
    Paragraph XIV.D states that the United States may file an action 
against a Defendant for violating the Final Judgment for up to four 
years after the Final Judgment has expired or been terminated. This 
provision is meant to address circumstances such as when evidence that 
a violation of the Final Judgment occurred during the term of the Final 
Judgment is not discovered until after the Final Judgment has expired 
or been terminated or when there is not sufficient time for the United 
States to complete an investigation of an alleged violation until after 
the Final Judgment has expired or been terminated. This provision, 
therefore, makes clear that, for four years after the Final Judgment 
has expired or been terminated, the United States may still challenge a 
violation that occurred during the term of the Final Judgment.
    Finally, Section XV of the proposed Final Judgment provides that 
the Final Judgment will expire ten years from the date of its entry, 
except that after five years from the date of its entry, the Final 
Judgment may be terminated upon notice by the United States to the 
Court and Defendants that the divestiture has been completed and that 
continuation of the Final Judgment is no longer necessary or in the 
public interest.

E. Monitoring Trustee

    Section X of the proposed Final Judgment provides that the United 
States may appoint a monitoring trustee with the power and authority to 
investigate and report on the Defendants' compliance with the terms of 
the Final Judgment and the Stipulation and Order. The monitoring 
trustee will not have any responsibility or obligation for the 
operation of the Defendants' businesses. The monitoring trustee will 
serve at Defendants' expense, on such terms and conditions as the 
United States approves, and Defendants must assist the trustee in 
fulfilling its obligations. The monitoring trustee will provide 
periodic reports to the United States and will serve until the later of 
the completion of the divestiture or the expiration of any transition 
services contract, unless the United States determines a shorter 
monitoring period is appropriate.

F. Divestiture Trustee

    If Defendants do not accomplish the divestiture within the period 
prescribed in Paragraph IV.A of the proposed Final Judgment, Section V 
of the proposed Final Judgment provides that the Court will appoint a 
divestiture trustee selected by the United States to effect the 
divestiture. If a divestiture trustee is appointed, the proposed Final 
Judgment provides that Defendants will pay all costs and expenses of 
the trustee. The divestiture trustee's commission will be structured so 
as to provide an incentive for the trustee based on the price obtained 
and the speed with which the divestiture is accomplished. After the 
divestiture trustee's appointment becomes effective, the trustee will 
provide monthly reports to the United States setting forth his or her 
efforts to accomplish the divestiture. If the divestiture has not been 
accomplished within six months of the divestiture trustee's 
appointment, the divestiture trustee and the United States may make 
recommendations to the Court, which will enter such orders as 
appropriate, in order to carry out the purpose of the Final Judgment, 
including by extending the trust or the term of the divestiture 
trustee's appointment.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment neither impairs 
nor assists the bringing of any private antitrust damage action. Under 
the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the 
proposed Final Judgment has no prima facie effect in any subsequent 
private lawsuit that may be brought against Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least 60 days preceding the 
effective date of the proposed Final Judgment within which any person 
may submit to the United States written comments regarding the proposed 
Final Judgment. Any person who wishes to comment should do so within 60 
days of the date of publication of this Competitive Impact Statement in 
the Federal Register, or the last date of publication in a newspaper of 
the summary of this Competitive Impact Statement, whichever is later. 
All comments received during this period will be considered by the U.S. 
Department of Justice, which remains free to withdraw its consent to 
the proposed Final Judgment at any time before the Court's entry of the 
Final Judgment. The comments and the response of the United States will 
be filed with the Court and in the Federal Register, unless the Court 
agrees that the United States instead may publish them on the U.S. 
Department of Justice, Antitrust Division's internet website.
    Written comments should be submitted to: Robert A. Lepore, Chief, 
Transportation, Energy, and Agriculture Section, Antitrust Division, 
U.S. Department of Justice, 450 Fifth Street NW, Suite 8000, 
Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    As an alternative to the proposed Final Judgment, the United States 
considered a full trial on the merits against Defendants. The United 
States could have continued the litigation and

[[Page 81516]]

sought preliminary and permanent injunctions against Intuit's 
acquisition of Credit Karma. The United States is satisfied, however, 
that the divestiture of assets described in the proposed Final Judgment 
will remedy the anticompetitive effects alleged in the Complaint, 
preserving competition for the provision of DDIY tax preparation 
products in the United States. Thus, the proposed Final Judgment 
achieves all or substantially all of the relief the United States would 
have obtained through litigation, but avoids the time, expense, and 
uncertainty of a full trial on the merits of the Complaint.

VII. Standard of Review Under the APPA for the Proposed Final Judgment

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a 60-day comment period, after which the Court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In making that determination, 
the Court, in accordance with the statute as amended in 2004, is 
required to consider:

    (A) The competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, 
the Court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); United States v. U.S. Airways Grp., 
Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the 
``court's inquiry is limited'' in Tunney Act settlements); United 
States v. InBev N.V./S.A., No. 08-1965 (JR), 2009 U.S. Dist. LEXIS 
84787, at *3 (D.D.C. Aug. 11, 2009) (noting that a court's review of a 
consent judgment is limited and only inquires ``into whether the 
government's determination that the proposed remedies will cure the 
antitrust violations alleged in the complaint was reasonable, and 
whether the mechanism to enforce the final judgment are clear and 
manageable'').
    As the U.S. Court of Appeals for the District of Columbia Circuit 
has held, under the APPA a court considers, among other things, the 
relationship between the remedy secured and the specific allegations in 
the government's complaint, whether the proposed Final Judgment is 
sufficiently clear, whether its enforcement mechanisms are sufficient, 
and whether it may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. With respect to the adequacy of the relief secured by 
the proposed Final Judgment, a court may not ``make de novo 
determination of facts and issues.'' United States v. W. Elec. Co., 993 
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also 
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F. 
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F. 
Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at 
*3. Instead, ``[t]he balancing of competing social and political 
interests affected by a proposed antitrust consent decree must be left, 
in the first instance, to the discretion of the Attorney General.'' W. 
Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ``The court 
should bear in mind the flexibility of the public interest inquiry: The 
court's function is not to determine whether the resulting array of 
rights and liabilities is one that will best serve society, but only to 
confirm that the resulting settlement is within the reaches of the 
public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks 
omitted); see also United States v. Deutsche Telekom AG, No. 19-2232 
(TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020). More demanding 
requirements would ``have enormous practical consequences for the 
government's ability to negotiate future settlements,'' contrary to 
congressional intent. Id. at 1456. ``The Tunney Act was not intended to 
create a disincentive to the use of the consent decree.'' Id.
    The United States' predictions about the efficacy of the remedy are 
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at 
1461 (recognizing courts should give ``due respect to the Justice 
Department's . . . view of the nature of its case''); United States v. 
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In 
evaluating objections to settlement agreements under the Tunney Act, a 
court must be mindful that [t]he government need not prove that the 
settlements will perfectly remedy the alleged antitrust harms[;] it 
need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'') (internal 
citations omitted); United States v. Republic Servs., Inc., 723 F. 
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to 
which the government's proposed remedy is accorded''); United States v. 
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A 
district court must accord due respect to the government's prediction 
as to the effect of proposed remedies, its perception of the market 
structure, and its view of the nature of the case''). The ultimate 
question is whether ``the remedies [obtained by the Final Judgment are] 
so inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest.' '' Microsoft, 56 F.3d at 1461 
(quoting W. Elec. Co., 900 F.2d at 309).
    Moreover, the Court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its complaint, and does not authorize the Court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he 
`public interest' is not to be measured by comparing the violations 
alleged in the complaint against those the court believes could have, 
or even should have, been alleged''). Because the ``court's authority 
to review the decree depends entirely on the government's exercising 
its prosecutorial discretion by bringing a case in the first place,'' 
it follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60.
    In its 2004 amendments to the APPA, Congress made clear its intent 
to preserve the practical benefits of using consent judgments proposed 
by the United States in antitrust enforcement, Public Law 108-237 Sec.  
221, and added the unambiguous instruction that ``[n]othing in this 
section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d 
at 76 (indicating that a court is not required to hold an evidentiary 
hearing or to

[[Page 81517]]

permit intervenors as part of its review under the Tunney Act). This 
language explicitly wrote into the statute what Congress intended when 
it first enacted the Tunney Act in 1974. As Senator Tunney explained: 
``[t]he court is nowhere compelled to go to trial or to engage in 
extended proceedings which might have the effect of vitiating the 
benefits of prompt and less costly settlement through the consent 
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Sen. 
Tunney). ``A court can make its public interest determination based on 
the competitive impact statement and response to public comments 
alone.'' U.S. Airways, 38 F. Supp. 3d at 76 (citing Enova Corp., 107 F. 
Supp. 2d at 17).

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

Dated: December 10, 2020.

Respectfully submitted,

FOR PLAINTIFF UNITED STATES OF AMERICA

-----------------------------------------------------------------------

Brian Hanna,
Attorney for the United States.
U.S. Department of Justice, Antitrust Division, 450 Fifth Street NW, 
Suite 8000, Washington, DC 20530, Tel: (202) 598-8360, Email: 
[email protected].

[FR Doc. 2020-27604 Filed 12-15-20; 8:45 am]
BILLING CODE 4410-11-P