Electrolux’s proposed $3.3bn acquisition of General Electric’s appliance business could become the latest deal to come undone after the US Department of Justice sued to block the deal.
Electrolux agreed to buy the unit last year as part of its effort to increase its presence in the US and reduce its dependence on Europe.
A deal would combine the number two and three domestic appliance makers in the US and give Electrolux about 40% of the US appliance market with arch rival Whirlpool also on around 40% market share.
In a lawsuit filed by the Department of Justice anti-trust regulators argued that the deal would result in higher prices for American consumers.
Deputy Assistant Attorney General Leslie C. Overton of the Justice Department’s Antitrust Division said:
“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.
Electrolux argued in a statement that the acquisition would accelerate innovation and create more choices – not less – for consumers.
It also hit out at the DoJ, saying the regulator’s opposition is “wholly inconsistent with its 2006 decision to approve Whirlpool’s acquisition of Maytag – at the time one of Whirlpool’s major competitors on the US home appliance market.“
GE also defended the deal. It said in a separate statement:
“Electrolux and GE intend to vigorously defend the proposed acquisition as pro-competitive and pro-consumer. Our goal remains to close the deal this year. GE continues to believe that GE Appliances’ customers, consumers and employees will benefit from Electrolux’s commitment to the appliance business and its ability to compete with global competitors.“