Trial Commences On GE Unit Sale
10 November 2015 - 7:03PM
Dow Jones News
(FROM THE WALL STREET JOURNAL 11/10/15)
By Brent Kendall
WASHINGTON -- The Justice Department jousted with Electrolux AB
and General Electric Co. on Monday during the first day of an
antitrust trial that will determine whether the companies can
proceed with a deal that could remake the U.S. appliance
market.
The government is challenging Electrolux's proposed $3.3 billion
deal to buy GE's appliance business, arguing the transaction would
diminish competition and spark higher prices for cooking
appliances.
In his opening statement, Justice Department lawyer Ethan Glass
said competition between GE and Electrolux has benefited appliance
consumers for a generation. If the acquisition isn't stopped,
Electrolux will sell two out of every three ranges sold in the U.S.
and prices could rise by 5% or more, he said.
"That is real money that American consumers will have to pay,"
he told U.S. District Judge Emmet G. Sullivan, who is presiding
over the case.
Mr. Glass said a post-acquisition Electrolux and remaining rival
Whirlpool Corp. would make nearly 90% of the ranges sold in the
U.S. He offered sharp words for Whirlpool, saying the company has
been actively supporting the deal between its two largest rivals
and is cooperating with them to get it approved.
A Whirlpool spokeswoman said the company "is not a party to this
lawsuit and we do not comment on legal cases involving our
competitors."
The Justice Department's presentation on Monday focused more
heavily on the retail market than the government did when it
initially filed its lawsuit in July.
Earlier, it argued primarily that the deal would harm so-called
contract-channel purchasers, like home builders and property
managers, that buy in bulk. Mr. Glass continued to press that
argument, but he also devoted considerable time to arguing that the
transaction would hurt value-minded retail customers looking for
lower-priced cooking appliances.
Electrolux and GE said the government's case is misguided and
ignores market realities, including the increasing presence of
overseas firms like Samsung Electronics Co. and LG Electronics
Inc., brands they said are popular with today's coveted younger
buyers. They also cited looming competition from China's Haier
Electronics Group and Turkey's Arcelik AS.
"New firms enter. Old firms either keep up or lose share," said
GE lawyer Paul Denis. The court, he said, could watch this
competition unfold during the holiday shopping season that will
play out alongside the trial, adding that early holiday-season data
from Home Depot Inc. shows Samsung "is crushing it."
The Electrolux deal, first announced in September 2014, is part
of GE's plan to shift away from consumer-focused businesses toward
tech-heavy industrial products.
The shadow of a previous appliance-industry merger, Whirlpool's
2006 acquisition of Maytag Corp., could loom over the case. The
Bush Justice Department allowed that transaction, and GE and
Electrolux believe their transaction is similar.
The trial is slated to last about three weeks. Judge Sullivan is
expected to rule early next year.
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(END) Dow Jones Newswires
November 10, 2015 02:48 ET (07:48 GMT)
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