EU antitrust authorities raised concerns about Amazon's (NASDAQ:AMZN) acquisition of iRobot (NASDAQ:IRBT), suggesting it could limit competition in the robot vacuum cleaner market, as reported by Reuters today. Following the news iRobot shares plunged more than 17% today.
The $1.4 billion deal, announced by Amazon in August last year, came as large tech companies face increasing scrutiny for acquiring smaller competitors and accumulating extensive data, potentially enhancing their market dominance or aiding their expansion into new areas.
The European Commission expressed concerns that Amazon might use its position to disadvantage iRobot's competitors. They highlighted potential strategies that Amazon could employ to restrict these rivals from selling their robot vacuum cleaners (RVCs) on Amazon's online marketplace or to degrade their access to it.
The Commission noted the significance of Amazon's online marketplace as a sales channel for RVCs in countries like France, Germany, Italy, and Spain.
Amazon received a formal statement of objections from the EU competition enforcer, outlining these concerns. Amazon indicated its cooperation with the Commission to address the concerns. Amazon believes that with its resources, it can accelerate iRobot's innovation, invest in essential features, and reduce prices for consumers.
Amazon has the option to request a closed-door hearing to present its case. The Commission is expected to make its decision by Feb 14, as per Reuters' report from the previous week, which anticipated that the deal would likely receive unconditional clearance.