European regulators claim that Amazon’s planned purchase of iRobot, a manufacturer of robot vacuums, could hurt competition.
European regulators warned on Monday that competition may be harmed by Amazon’s proposed acquisition of iRobot, a manufacturer of robot vacuums.
After an inquiry that started in July, the European Commission—the executive branch of the European Union and its principal antitrust enforcer—stated that it has provided Amazon with its “preliminary view” of the transaction.
The announcement increased investor apprehension about the purchase, causing shares of iRobot Corp., a Bedford, Massachusetts-based company best known for the Roomba vacuum, to drop more than 17% on Monday.
The takeover has alarmed European regulators, who claim that iRobot’s competitors may find it more difficult to successfully compete on Amazon’s marketplace, a crucial channel for the sale of robot vacuum cleaners in France, Germany, Italy, and Spain.
The commission stated that, should the acquisition close, Amazon might have an incentive to either outright ban competitors from selling their goods on its marketplace or make it more difficult for them to do so.
It stated, among other things, that Amazon might restrict access to specific labels, like “Amazon’s Choice,” that might draw in more customers or lessen the exposure of rival goods on its marketplace. According to the commission, it might also figure out how to make it more expensive for iRobot’s competitors to market and sell their goods on its network.
The board will have until February 14th to decide on the agreement in its entirety. Additionally, the company might address some of the criticisms made.
A representative for Amazon, Alexandra Miller, stated that the Seattle-based business is collaborating with the commission and is concentrated on responding to its inquiries.
“IRobot offers useful and creative products, but it faces fierce competition from other vacuum cleaner suppliers,” Miller stated. “We think Amazon can provide iRobot with the means to invest in essential features and accelerate innovation, all while bringing down prices for customers.”
When the $1.7 billion acquisition of iRobot by Amazon was first disclosed last year, the deal’s value dropped by 15% as a result of the vacuum company taking on additional debt.
Concerns regarding the purchase have been raised by anti-monopoly groups, who claim that it will increase the e-commerce giant’s influence over the smart home industry.
However, back in June, British antitrust authorities approved Amazon’s acquisition of iRobot. The Federal Trade Commission is still investigating the acquisition in the United States.
On Monday, Amazon’s shares ended the day down less than 1%.
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