European Union regulators expressed concern over Amazon's acquisition of vacuum maker iRobot, saying the deal would harm competition.
The EU's executive arm and top antitrust enforcer, the European Commission, said it has already informed the e-commerce company of its "preliminary view" regarding the deal. This follows an investigation that started in July.
Amazon's Acquisition Deal With iRobot
Amazon is facing criticism over its acquisition deal with iRobot as European regulators argue that it could harm competition.
The acquisition news raised concerns from investors and sent shares in Bedford, Massachusetts-based iRobot Corp. down more than 17% on Monday. European regulators said the buyout could hinder the company's rivals from effectively competing in Amazon's marketplace.
They said it is an important platform for selling robot vacuum cleaners in various regions, including France, Germany, Italy, and Spain. If the acquisition deal goes through, the commission said that Amazon could be incentivized to prevent competitors from selling their products on its marketplace or make it more difficult for them to do so, as Yahoo News.
It added that, among other things, the e-commerce company could reduce the visibility of a competitor's product on its platform or limit access to certain labels. These include "Amazon's Choice," which could help sellers attract more consumers.
Amazon could also find other ways to raise the costs of iRobot's rivals to advertise and sell their products on its marketplace. The commission has until Feb. 14 to make a final decision regarding the deal, and Amazon could respond to some of the objections that could be raised.
A spokesperson for Amazon, Alexandra Miller, said that the Seattle-based company is already working with the commission and is prioritizing addressing its questions. She noted that iRobot faces intense competition from other vacuum cleaner supplies but offers practical and inventive products.
The acquisition deal was announced in August of last year amid increased regulatory scrutiny around the world of Big Tech acquiring smaller rivals. According to Reuters, this particular effort could boost their market dominance or help them expand into other markets.
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Scrutiny From European Regulators
On top of concerns from the European Commission, the acquisition deal is also under review by the US Federal Trade Commission. In June, the UK's Competition and Markets Authority said that the deal would not result in a "substantial lessening of competition" in the UK.
The commission's announcement comes after iRobot's shares skyrocketed 39% on Friday after reports that the deal would "win unconditional EU antitrust approval." The report cited three sources who were familiar with the matter. On the other hand, an EU spokesperson declined to comment regarding the development, said CNBC.
The deal between Amazon and iRobot would have the former acquire the latter for roughly $1.7 billion. However, the deal's value declined by 15% after the vacuum maker company incurred new debt.
Amid the scrutiny by regulators, anti-monopoly organizations have also voiced their opposition to the Amazon-iRobot deal, arguing that it would broaden the e-commerce company's dominance in the smart home market, where it already holds significant influence. On Monday, the firm's stock finished up less than 1%.
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