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iRobot’s Roomba Combo j7+. | Supply: iRobot

Regardless of the UK Competitors and Markets Authority (CMA) clearing Amazon’s $1.7 billion pending acquisition of iRobot simply final week, the European Union (EU) appears able to open a full-scale anti-trust investigation into the deal, in keeping with Reuters. 

On July 6, in keeping with Reuters, the EU will begin a four-month investigation on the finish of its preliminary assessment of the acquisition. Whereas Amazon nonetheless has an opportunity to persuade the European Fee that the deal wouldn’t intervene with antitrust legal guidelines, sources informed Reuters the chances towards which are excessive.

Amazon first introduced its plans to buy iRobot in August 2022. The deal was shortly put on maintain in September 2022, when the Federal Commerce Fee (FTC) formally began an antitrust investigation into the deal.  

Whereas Amazon hasn’t commented a lot publicly on the FTC or EU investigations, it did beforehand spotlight the dimensions of the robotic vacuum cleaner market, and the truth that a lot of its competitors comes from Chinese language gamers. 

The CMA and EU don’t all the time see eye-to-eye on antitrust legal guidelines. For instance, the CMA beforehand blocked Microsoft’s $69.7 billion acquisition of Activision, whereas the European Fee cleared the deal so long as Microsoft agreed to license offers with rival streaming platforms. 

Gaining CMA approval

The CMA’s investigation was centered round three considerations in regards to the acquisition. The primary was that Amazon’s acquisition of iRobot would end in a major lack of competitors within the robotic vacuum cleaner market, as Amazon may probably compete as a provider. Nevertheless, due to iRobot’s modest market place within the UK, and its vital rivals that exist already, the CMA determined that the potential lack of competitors wouldn’t be substantial sufficient to tremendously impression market outcomes. 

The CMA’s subsequent concern was that Amazon may use its on-line retailer to drawback iRobot’s rivals after the merger. Throughout its investigation, the CMA discovered that whereas this may be doable, Amazon doesn’t have a lot of an incentive to throttle its robotic vacuum competitors. That is due to how small the robotic vacuum cleaner market is within the UK and the truth that it’s not prone to considerably develop sooner or later. This implies Amazon would seemingly lose income from gross sales commissions and lowered promoting if it tried to hinder its competitors.

Lastly, the CMA was involved that robotic vacuum cleaners may very well be an vital facet of “good dwelling” platforms, like Amazon’s Alexa, and so Amazon’s good dwelling rivals may very well be deprived due to the merger. The CMA additionally discovered this seemingly wouldn’t be a problem as a result of robotic vacuum cleaners, and the info they collect, are usually not vital inputs for good dwelling units. Moreover, there are different robotic vacuum makers whose vacuums have related capabilities’ to iRobot’s Roombas, so these different vacuum makers may very well be a part of a rival good dwelling system. 

“Extra persons are selecting to make use of ‘good’ tech of their houses – whether or not that’s listening to the radio via a sensible speaker, answering the door utilizing a video doorbell, or retaining flooring clear with robotic vacuum cleaners,” Colin Raftery, senior director of mergers on the CMA, mentioned. That’s why it’s vital to make sure tech corporations that already profit from highly effective positions aren’t ready to make use of these positions to undermine opponents on the expense of UK customers and companies. Right here, after an intensive investigation, we’re glad that the deal would don’t have any impression on competitors within the UK.”

Whereas Amazon has approval for the acquisition within the UK, its investigations with the FTC and EU are ongoing, and it may very well be months earlier than regulators attain a conclusion on whether or not the deal can transfer ahead.