Over the years, Amazon has grown to become a tech giant, becoming a concern to a number of consumer groups. Now, according to a report published in Reuters, the European Union’s competition watchdog has announced that it could potentially block Amazon’s acquisition of iRobot, a vacuum cleaner manufacturer.
Amazon initiated the purchase of iRobot, renowned for its Roomba cleaner, in August 2022, with the takeover valued at $1.7 billion (£1.4 billion). The move aimed to enhance Amazon’s position in the smart home appliances market.
However, regulatory concerns have arisen about the potential anticompetitive impact of iRobot’s association with Amazon, particularly if Amazon were to favor Roomba over competitors on its e-commerce platform.
This development deals a setback to the tech giant, given that the UK government’s competition watchdog had previously approved the purchase. Roomba models are currently on sale for approximately £1648 in the UK.
The Competition and Markets Authority (CMA) in the UK determined that Amazon’s market presence was “modest” and faced significant competition from other rivals.
The European Commission (EC), acting as the EU’s competition watchdog, commenced an investigation into the takeover in July of the preceding year. The EC is legally obligated to reach a decision by February 14, and a consensus among the commission’s 27 top political leaders is required before a final rejection can be issued.
Upon the initial report of the EU’s intentions by the Wall Street Journal, iRobot shares experienced a 40% decline in after-hours trading. Amazon’s takeover had been perceived as beneficial for iRobot, which has been dealing with the issue of declining sales in recent months.
In an interview with Reuters, Matt Schruers, president of the tech lobbying group Computer and Communications Industry Association said, “If the objective is to have more competition in the home robotics sector, this makes no sense.
Blocking this deal may well leave consumers with fewer options, and regulators cannot sweep that fact under the rug.”
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