The UK CMA has given the nod for the Whirlpool Arcelik deal to proceed, which largely comes as a surprise to no-one given the current landscape in the industry.
This happened a few days ago but we’ve been mulling it and talking to people about it.
The head honcho of the panel for the CMA, Martin Colemans, said: “We conducted a thorough investigation into this deal, which included extensive engagement with customers, competitors, and others. We found that the deal may not be expected to harm competition, with shoppers continuing to benefit from a wide range of options.
“As such, we believe this deal should be allowed to proceed.”
Effectively, saying, it’s all fine chaps, carry on.
Interestingly though they panel also acknowledges that things have changed and are liable to continue to do so. If we get time we’ll dig into that further in a future article but they have stated what we suspected was the fundamental reason for this move by Whirlpool by stating that:
“Whirlpool’s market position in MDAs has significantly declined over the last decade, and it is likely that its European MDA business will be fundamentally different in the future. At the same time, suppliers such as Haier Group and Hisense have gained market share, and it is likely that they will continue to expand.”
Basically, the Chinese have not only arrived but are gobbling up market share in Europe at an alarming rate, seemingly unchecked.
Specifically mentioning Haier, who now own the Candy Group and Hisense who now own Gorenje.
Midea is also said to be determined to make inroads into Europe.
We suspect that much like electric cars and so on that the domestic Chinese market is saturated and that these companies have to look to external markets to grow and, it also feeds revenues back into the Chinese economy. Whether these are state funded or owned we are unclear on.
But it does make competing “difficult” for the traditional appliance producers regardless of how the Chinese companies are accomplishing the low prices.
Some in the industry have commented that this is not a good thing, without quite being able to define how or why that is as, after all, what Whirlpool and Arcelik are doing is reacting to what’s in front of them to survive.
The question is, is this a good thing and the only answer we can come up with is, we’ll have to wait and see.
