As we all know there are currently allsorts going on in the US with regards to Whirlpool’s $1.68-$1.79 billion offer to buy its arch-rival, Maytag. The story is all over the web and media and you have to wonder what all the fuss is about.
In this I’ll try to explain why it is important and why we should be concerned.
In short, there’s a trust issue here. Can Whirlpool be trusted with a 75% share of segments within the US market? Just think of the power over market conditions that Whirlpool would then have at its fingertips and is that good for competition?
Nicholas Hermann, an analyst with Prudential, wrote, “Of particular focus is the merger’s potential impact on the affordability of entry-price point laundry products,” as the two together would control 75 percent of the U.S. market for the most popular types of machines.
This would offer Whirlpool unprecedented control over the market.
However the ramifications of this deal don’t just stop there, they actually carry over into other areas of industry and why that this deal is attracting so much attention.
“If they don’t challenge this merger, Ford and General Motors is next,” Steven M. Axinn, an antitrust lawyer who is not involved in the transaction, told Bloomberg. “Unless someone can argue that Maytag is going out of business, I don’t understand how the government can let this deal happen.”
Is the US DoJ prepared to stand up to Whirlpool and say no to them is as yet its unclear, but the murmors from Washington seem to suggest that the deal will be opposed by the DoJ. But that may well not be the end of the tale as the DoJ can be challenged on it’s decision by Whirlpool should it go against them and there is precedence for such a move in the US legal system.
So despite clearance by Canadian regulators earlier this week the general concensus is that the US DoJ will challenge this merger with many anti-trust attorneys seemingly gobsmacked at the prospect of the merger getting through unchallenged.
Whilst this may not seem too important for the European market as it stands now such merger, or others like it, could massively affect the European markets. In this instance Maytag tends to portray itself as a more upmarket brand in the EU and Whirlpool is more mainstream, certainly on pricing, but what would happen if Whirlpool, for example, decided to target Electrolux or Indesit?
Some may say that such an event could never happen, but then who could have forseen the day when Whirlpool would be in a position to buy giants such as Philips Appliances division and then Maytag?