PhotoBowing to U.S. Justice Department arguments that the deal was anti-competitive and would hurt consumers, General Electric has abandoned the sale of its major appliance brands to Electrolux.

Electrolux sells the Frigidaire, Tappan, and Electrolux brands in the U.S., while GE's brands include GE Monogram, GE Café, GE Profile, GE, GE Artistry, and Hotpoint.  

The Justice Department brought suit on July 1, 2015, to challenge the $3.3 billion acquisition because it would combine two of the leading manufacturers of ranges, cooktops, and wall ovens sold in the United States. The Justice Department alleges that the deal would eliminate competition that benefits American consumers and home builders through lower prices and more options.

The decision to throw in the towel came four weeks into a trial before U.S. District Court Judge Emmet G. Sullivan.

"Facts matter"

“In the courtroom, facts matter,” said Deputy Assistant Attorney General David I. Gelfand of the Justice Department’s Antitrust Division. “Rhetoric does not. This deal was bad for the millions of consumers who buy cooking appliances every year. Electrolux and General Electric could not overcome that reality at trial."

Both sides retreated to their corners but vowed to come out fighting when new partners are found. 

Sweden-based Electrolux needed the deal more than GE, in most analysts' view, because it needs to beef up its strength in the U.S., where it sells about $2.6 billion worth of major appliances each year. GE sells about $3.4 billion.

The companies argued that Electrolux needed to scale up to compete effectively against Whirlpool. The Justice Department disagreed, saying that the deal would have given Electrolux and Whirlpool 88% of the market for cooking ranges. 

"The worst possible outcome (for Electrolux) became a reality," said one analyst.


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