CMA is considering investigating Whirlpool’s merger with Turkey’s Arcelik
- Arcelik, based in Istanbul, is one of Europe’s largest household appliance sellers
- The CMA said the deal could lead to higher prices and inferior products
The British competition authority is considering an investigation into the proposed merger between Whirlpool and a company belonging to Turkey’s largest industrial group.
The Competition and Markets Authority (CMA) said Arcelik’s planned takeover of Whirlpool’s European home appliances business could lead to higher prices and lower quality products for consumers.
Unless Arcelik adequately addresses its concerns, the regulator warned, a full investigation into the deal will be launched.
Concern: The CMA said Arcelik’s planned takeover of Whirlpool’s European home appliances business could lead to higher prices and lower quality products for consumers
Istanbul-based Arcelik, owned by Koç Holding, is one of Europe’s largest home appliance sellers and its Beko brand is particularly popular with British customers.
In January, the group’s Dutch subsidiary agreed with Whirlpool to combine its European operations into a new standalone company.
Arcelik will hold a 75 percent stake in the new joint venture, while Whirlpool, whose brands include Hotpoint and Indesit, will control the remaining 25 percent.
If the merger goes through, which is expected sometime this year, the companies expect to generate cost synergies of more than €200 million.
The newly enlarged company would also likely have over 20,000 employees across Europe, total annual sales of almost 6 billion euros and an annual production capacity of around 24 million household appliances.
It would also be the UK’s single largest supplier of tumble dryers, dishwashers, washing machines and cooking appliances – a market worth over £3.8 billion.
However, the CMA said the two companies’ combined dominance in the low to mid-price categories of these specific devices would mean a “small number” of competitors.
“We are concerned that this could limit the choice of suppliers for retailers and ultimately buyers,” added Sorcha O’Carroll, senior director of mergers at the CMA.
“As competition from other providers in the low to mid-price segment appears to be limited, we are concerned that this merger could result in people paying more or receiving lower quality products.”
“Unless Arçelik offers a solution to our concerns, we will launch a thorough investigation.”
The company has until October 5th to contact the competition authority. The European antitrust authorities are also analyzing the merger and are expected to make a decision by October 23rd.