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European Union regulators intend to block Amazon’s attempt to purchase Roomba-maker iRobot, The Wall Street Journal reported yesterday.
European Commission competition officials “met Thursday with representatives from Amazon to discuss the deal,” the Journal wrote, citing people familiar with the matter. “Amazon was told during the meeting that the deal was likely to be rejected,” according to one of the Journal’s sources.
Amazon announced the $1.7 billion deal in August 2022. The EC has a February 14 deadline to reach a decision. European officials have said that Amazon could restrict the availability of Roomba rivals on the Amazon online retail store.
A move to block the iRobot purchase “would still need formal approval from the commission’s 27 top political leaders before a final decision can be issued,” the WSJ article said. “Historically, that process is unlikely to overrule a recommendation from the bloc’s competition commissioner, Margrethe Vestager.”
Amazon declined to comment when contacted by Ars today but pointed us toward a statement by lobby group Computer & Communications Industry Association (CCIA). “If the objective is to have more competition in the home robotics sector, this makes no sense,” CCIA President Matt Schruers said. “There is no plausible risk to competition from a US retailer acquiring a struggling US vacuum maker in a sector overtaken by dynamic Chinese manufacturers. Blocking this deal may well leave consumers with fewer options, and regulators cannot sweep that fact under the rug.”
EC told Amazon deal may restrict competition
In November 2023, the EC announced that it had “informed Amazon of its preliminary view that its proposed acquisition of iRobot may restrict competition in the market for robot vacuum cleaners.” The EC sent a statement of objections, a formal step in the process that could lead to a merger being blocked.
“Amazon may have the ability and the incentive to foreclose iRobot’s rivals,” the EC’s November statement said. The regulatory body said that Amazon could punish rival sellers of robot vacuum cleaners (RVCs) on its online store.
Possible Amazon tactics cited by the EC included “delisting rival RVCs; reducing visibility of rival RVCs in both non-paid (i.e., organic) and paid results (i.e., advertisements) displayed in Amazon’s marketplace; limiting access to certain widgets (e.g. ‘other products you may like’) or certain commercially attractive product labels (e.g. ‘Amazon’s choice’ or ‘Works With Alexa’); and/or directly or indirectly raising the costs of iRobot’s rivals to advertise and sell their RVCs on Amazon’s marketplace.”
Last week, Amazon missed a deadline to offer European officials remedies to address their concerns about the deal’s impact on competition.
As of this writing, iRobot’s stock price was down about 27 percent today. Amazon’s stock price was up around 1 percent.
