An organisation representing Europe’s technology industry has expressed anger after the European Commission pulled the plug on a proposed merger between US firms Amazon and Roomba automated vacuum-cleaner maker iRobot.
In a joint statement on January 29, both American companies announced they were abandoning the deal.
“Amazon’s proposed acquisition of iRobot has no path to regulatory approval in the European Union, preventing Amazon and iRobot from moving forward together,” the companies said, describing the collapse of the merger as a “loss for consumers, competition, and innovation”.
The not-for-profit trade group Computer and Communications Industry Association (CCIA Europe) also lambasted the EC’s push to block the merger, accusing it of acting in a “political” manner.
Margrethe Vestager, Executive Vice President of the European Commission for A Europe Fit for the Digital Age, said on January 29 after the announcement: “We … found that Amazon would have had the incentive to foreclose iRobot’s rivals because it would have been economically profitable to do so.
“All such foreclosure strategies could have restricted competition in the market for robot vacuum cleaners, leading to higher prices, lower quality, and less innovation for consumers.”
CCIA Europe Senior Vice President, Daniel Friedlaender said: “If Europe adopts a merger policy driven by political goals that only serve industrial policy, rather than a competitive market, this will ultimately lead to less competition and less innovation in the EU.”
He added that there were no “valid reasons” for the merger to be stopped, especially considering iRobot’s ongoing “financial difficulties”.
“This sends the wrong message to both global investors and EU start-ups: as soon as you reach a certain size, you can forget about future mergers and acquisitions,” Friedlaender added.
“Neither competition law, nor the [EU] Digital Markets Act, should be used to artificially limit or restrict healthy markets or legitimate acquisitions.”
Margrethe Vestager, European Commissioner for Competition, is to attempt to exert pressure on the CEOs of Apple and Google during her ongoing US trip as the European Union looks to fully implement the Digital Markets Act. https://t.co/cyg6Zn4Tl9
— Brussels Signal (@brusselssignal) January 12, 2024
First agreed in 2021, the merger reportedly encountered difficulties earlier in January, with a deadline for reaching a final decision set for February 14.
According to leaks published by the Wall Street Journal, the EC had quietly informed Amazon that it intended to torpedo the deal.
Both companies have now agreed that Amazon will pay iRobot a $94 million termination fee as part of ending the merger attempt.
This break-up payment has seemingly not been enough to stave off fears regarding the company, with iRobot seeing its stock tank by more than 10 per cent in early NASDAQ trading in the wake of the news. That extended their decline this month to more than 60 per cent.
The company has announced it is laying off almost one-third of its staff, some 350 workers, with its CEO Colin Angle also resigning over the deal’s failure.
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— Brussels Signal (@brusselssignal) January 25, 2024
