EU Set to Block Amazon’s Acquisition of iRobot
The European Union’s competition watchdog is poised to block Amazon’s proposed takeover of vacuum cleaner manufacturer iRobot, according to sources reported by the BBC. This development deals a setback to the tech giant, which had received approval from the UK government’s competition watchdog for the acquisition.
The UK’s Competition and Markets Authority (CMA) previously cleared the purchase, stating that Amazon’s market position in the UK was “modest” and it faced significant competition from other rivals. However, the European Union’s competition watchdog, the European Commission (EC), has raised concerns about the potential anti-competitive impact of the merger.
Amazon had initiated the $1.7 billion takeover deal with iRobot, renowned for its Roomba cleaner, in August 2022. The move was part of Amazon’s strategic efforts to expand its presence in the smart home appliances market.
Regulators are apprehensive that if Amazon acquires iRobot, it may give preferential treatment to Roomba over other vacuum manufacturers on its e-commerce platform, creating hurdles for fair competition in the market.
The EC began investigating the acquisition in July of the previous year and has until February 14 to make a final decision. However, consensus among the commission’s 27 top political leaders is required before issuing the rejection.
News of the EU’s intentions to block the acquisition led to a significant drop in iRobot shares, plummeting 40% in after-hours trading, as reported by the Wall Street Journal.
The proposed acquisition was seen as a positive development for iRobot, which has faced challenges with declining sales. Critics of the potential rejection argue that blocking the deal could limit consumer options in the home robotics sector.
“If the objective is to have more competition in the home robotics sector, this makes no sense,” commented Matt Schruers, president of the tech lobbying group Computer and Communications Industry Association. “Blocking this deal may well leave consumers with fewer options, and regulators cannot sweep that fact under the rug,” Schruers emphasized. Roomba models, iRobot’s flagship product, currently retail for approximately Ā£1648 in the UK.
