DOJ Sues Electrolux Over GE Deal
The U.S. Justice Department (DOJ) has ruled against the proposed acquisition of General Electric (GE) Appliances by Electrolux. In fact, they even filed a civil antitrust lawsuit to stop the said acquisition from happening.
In a press statement issued by Deputy Assistant Attorney General Leslie C. Overton of the Justice Department’s Antitrust Division, he explains, “Electrolux’s proposed acquisition of General Electric’s appliance business would leave millions of Americans vulnerable to price increases for ranges, cooktops and wall ovens, products that serve an important role in family life and represent large purchases for many households. This lawsuit also seeks to prevent a duopoly in the sale of these major cooking appliances to builders and other commercial purchasers, who often pass on price increases to home buyers or renters.”
Needless to say, Electrolux is anything but pleased.
In response, Electrolux has issued a statement, saying, “Electrolux contests vigorously this effort by the DOJ to oppose the transaction. The review of the proposed acquisition will now continue in a court procedure.”
Meanwhile, GE has also released a statement following the lawsuit, saying, “Electrolux and GE intend to vigorously defend the proposed acquisition as pro-competitive and pro-consumer.”
Furthermore, Electrolux is quick to point out that the opposition is “wholly inconsistent” considering that that DOJ had approved Whirlpool’s acquisition of Maytag back in 2006. The two brands were major competitors back then.
The Department of Justice’s Antitrust Division believes the acquisition of GE Appliances by AB Electrolux and Electrolux North America Inc. will end up putting together the two leading manufacturers when it comes to ranges, cooktops and wall ovens. They believe that this strategic move has the possibility of “eliminating competition that has benefited American consumers through lower prices and more options.”
In a copy of the complaint filed by the DOJ against AB Electrolux, Electrolux North America, Inc. and General Electric Company obtained by Morning News USA, DOJ also elaborated their main concern, stating, “While the proposed acquisition’s harmful effects likely would be particularly acute in sales to contract-channel purchasers, those effects also likely would be felt across all purchases of major cooking appliances. Purchasers in the United States spent over $4 billion on major cooking appliances in 2014. General Electric describes itself as the ‘clear leader’ for cooking products sold in the United States. Electrolux likewise touts itself as ‘the leader in cooking products.’ Top Electrolux executives have recognized that by merging these two leaders in major cooking appliances, ‘the combined entity would have a dominant position as market leader.'”
However, Electrolux argues that consumers are much better off if their acquisition is allowed to go through. Electrolux President and CEO Keith McLoughlin says, “We believe this acquisition accelerates consumer innovation, which improves the industry as a whole, and results in more consumer choice than ever.”
Electrolux announced its intention to acquire its GE Appliances in September 2013. The said acquisition is worth about $3 billion. According to the Electrolux GE Appliance Acquisition website, the said combined business will mean an ingenious synergy of 9 brands (DOJ is quick to point out Frigidaire), an ability to reach out to over 150 markets worldwide and a combined industry experience of over 90 years.
For the moment, Electrolux remains undeterred in pursuing the acquisition. In fact, they had said, “Electrolux remains confident in its assessment of the competitive merits of this transaction and its favorable impact on consumers and Electrolux therefore still expects the transaction to close in 2015.”