They Thought The iRobot Amazon Deal Was A Done Deal, Till The EU Stepped In Overnight
Amazon’s US$1.4 billion deal with robotic vacuum Company iRobot, was tipped to be close, now new problems have emerged, with the deal set to be derailed unless several competitive issues are resolved to the satisfaction of the European Union.
The change in attitude by the EU came to light after the European Commission in Brussels issued a so-called statement of objection overnight warning how Amazon’s proposed deal could hurt the robot vacuum cleaner market and let the e-commerce giant strengthen its position in online marketplaces and in other data-related services.
In Australia. iRobot is distributed by Melbourne-based IXL Home has lost market share to Ecovacs during the past year, with the possibility emerging that the distributor could lose the brand if Amazon is allowed to aquire the business.
Overnight iRobot shares fell 17% to US$34.35, the biggest drop in almost three years.
Last week the Companies stock soared after a Reuters report suggested the deal would be cleared unconditionally.
In its warning, the European Commission said Amazon could demote other robot vacuum cleaners on its platform and promote its own products with such labels as “Amazon’s choice” or “Works with Alexa.” The commission also said Amazon may find it “economically profitable” to shut out rivals.
Bloomberg claims that while getting a statement of objections signals the EU has serious concerns with a transaction, most merging companies avoid a veto by addressing competition issues.
An Amazon spokesperson said that the company is focused on addressing the European Commission’s concerns.
iRobot’s sales surged during the pandemic as housebound families sought faster ways to clean their residences. But demand for its products has since waned as households return to a normal homework environment.
The EU opened an in-depth probe into the deal in July, noting that it could thwart other robot vacuum cleaners and make it “more difficult for rival marketplace providers to match Amazon’s online marketplace services.”
Last night’s move puts the commission at odds with Britain’s Competition and Markets Authority, which gave the deal the green light after concluding that iRobot has a modest market power.
The US Federal Trade Commission has been eyeing the transaction since September 2022 over competition concerns and critiques by privacy activists that the deal would give Amazon too much control over the smart-home device market and valuable data about American homes.