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Published on July 2nd, 2015 | by The GC Team

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US Justice Department moves to block Electrolux/GE deal

The US Department of Justice has filed a civil antitrust lawsuit in a bid to block Electrolux’s acquisition of General Electric Company’s appliance business, stating that the $3.3 billion deal would eliminate competition that has benefited American consumers through lower prices and more options.

Deputy Assistant Attorney General Leslie C. Overton of the Justice Department’s Antitrust Division, said the proposed acquisition 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.”

She added that the 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, which announced it had entered into an agreement to acquire GE Appliances in September last year, said it “vigorously” contests the DOJ’s effort to oppose the transaction and it disagrees with the Department’s assessment that the acquisition will harm competition.

“Electrolux believes the acquisition will increase competition and provide consumers access to a greater choice of high quality products at a wider range of competitive prices,” the company said in a statement.

“The acquisition is intended to enhance Electrolux scale and efficiencies in order to invest more in innovation and growth for the benefit of all consumers, retailers, employees and shareholders. Electrolux also finds DOJ’s opposition to be wholly inconsistent with its 2006 decision to approve Whirlpool’s acquisition of Maytag – at the time one of Whirlpool’s major competitors on the U.S. home appliance market.”

President and CEO of Electrolux Keith McLoughlin (pictured) said: “We believe this acquisition accelerates consumer innovation, which improves the industry as a whole and results in more consumer choice than ever.”

Electrolux has already obtained regulatory approval in Brazil, Canada and Ecuador. The transaction is subject to filing requirements in a few more countries in Latin America.

The manufacturer said it remains confident in its assessment of the competitive merits of the transaction and its favourable impact on consumers and therefore still expects the transaction to close in 2015.

Sources say that the acquisition would give Electrolux around 40% of the US appliance market.

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