A federal judge has ruled against H&R Block to prevent the tax prep giant from moving forward with its $287.5 million acquisition of 2SS Holdings, whose 2nd Story Software unit develops TaxAct software, after the Justice Department objected to the deal.

The Justice Department had filed suit in May to block the acquisition on antitrust grounds, arguing that it would substantially lessen competition in the do-it-yourself tax prep software market (see DOJ Files Suit to Stop H&R Block from Buying TaxAct). Block’s consumer tax prep package, H&R Block At Home (formerly known as TaxCut), is the second most popular in the market next to Intuit’s best-selling TurboTax, with TaxAct in third place.

On Monday, U.S. District Judge Beryl Howell agreed with the Justice Department and granted a preliminary injunction to block the deal on antitrust grounds. The case is the Justice Department’s first antitrust lawsuit since 2004, when the department filed suit unsuccessfully to block Oracle from buying PeopleSoft.

Block expressed its dismay at the ruling, with spokesman Gene King telling Bloomberg, “We are disappointed with the decision and continue to believe this was in the best interest of consumers. We are taking time to analyze the verdict to determine our next steps.”

Separately, in a more positive development Monday for H&R Block, the company announced a deal with Walmart to offer tax prep services in approximately 300 Walmart locations starting in December.

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