US government moves to block GE’s appliance business merger with Electrolux
02 Jul 2015
The US government yesterday filed a lawsuit to stop the $3.3-billion merger between Sweden's Electrolux AB and General Electric Co's appliance business.
The lawsuit filed by the US Department of Justice (DoJ) says that the proposed acquisition would combine two of the leading manufacturers of ranges, cooktops and wall ovens sold in the US, eliminating competition that has benefited American consumers through lower prices and more options.
According to the DoJ's complaint, consumers in the US spent over $4 billion on these major cooking appliances in 2014.''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,'' said deputy assistant attorney general, Leslie Overton of the DoJ's antitrust division.
''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,'' it added.
In September 2014, Electrolux, whose brands include Frigidaire, AEG and Zanussi, struck a friendly deal to buy GE's appliances business for $3.3 billion in cash. (See: Sweden's Electrolux to buy GE appliance unit for $3.3 bn)
The proposed acquisition of GE's appliance's business - including cookers, refrigerators, air conditioners and water heaters, would have seen Electrolux's sales more than double in the US market from around $2.6 billion to $4 billion and help it take on its arch US rival Whirlpool Corp.
In the US, GE's annual major appliance, whose brands include GE Monogram, GE Café, GE Profile, GE, GE Artistry and Hotpoint, has sales of approximately $3.4 billion, said the DoJ.
GE, which made the first electric toaster more than 100 years ago, said in a statement that its goal remained to close the deal in 2015. "Electrolux and GE intend to vigorously defend the proposed acquisition," the Kentucky-based company said in a statement.
Electrolux is the second-largest home appliance maker in the world after Whirlpool, with Europe as its strongest market.
Whirlpool emerged the world's largest appliance maker by acquired Maytag Corporation for $1.8 billion in 2006.
