Amazon first revealed plans to buy robot vacuum cleaner iRobot for $1.7 billion last August, though the megabuck deal was still likely to attract regulators’ attention. The European Commission (EC) will decide before July 6 whether to clear the deal (with or without recourse) or launch a full-scale investigation, while the Federal Trade Commission (FTC) in the United States is currently considering a formal investigation into the deal.
The FTC recently greenlighted Amazon’s $3.9 billion acquisition of One Medical, though it is pushing to halt Microsoft’s planned $68.7 billion acquisition of Activision.
In short, it’s unclear whether Amazon’s purchase of iRobot will survive regulators elsewhere, but today’s news from the UK – which recently blocked the Microsoft/Activision deal (subject to appeal) – could be a harbinger of what is to come elsewhere, given that regulators often cooperate and share notes in such scenarios. But nothing is certain here.
“Merging parties will no doubt be reassured by the CMA’s clearance, although they will also be aware that the various regulatory agencies do not always operate in perfect harmony with each other,” said Alex Haffner, competition partner at UK law firm Fladgate. in a statement released to TechCrunch.
Modest market share
Founded by the Massachusetts Institute of Technology (MIT) about three decades ago, iRobot is best known for its Roomba-branded standalone vacuums, though it has branched out into related products, including those capable of cleaning floors. For Amazon, which is looking to dive deeper into the smart home in addition to its own dabbling in home robotics, it was no major surprise that iRobot fell on its radar.
The UK’s Competition and Markets Authority (CMA) first revealed it was reviewing the deal in April, but has now found that Amazon buying iRobot would not hurt competition in the UK. This, in large part according to the CMA, is because iRobot UK’s market position is “modest” and it already has several rivals. But on top of that, concerns that Amazon might use its ubiquitous online marketplace to “disadvantage” iRobot’s rivals by downgrading their presence were unfounded, as Amazon would “lack the incentive to do so” because the UK robot vacuum market is small.
At the very least, today’s UK decision could help address criticism leveled at the CMA in recent months over the way it blocks merger and acquisition (M&A) activity, involving especially American companies.
“The clearance decision is a helpful response to allegations, which have taken on particular prominence recently in light of the Microsoft/Activision acquisition, that CMA is anti-technology or unduly stifles economic growth in the industry,” Haffner said. “In reality though, the ‘fundamentals’ of this deal mean that CMA’s valuation was far less controversial than in other technology cases, especially given iRobot’s low market share.”