EU regulators say Amazon's iRobot acquisition 'could restrict market competition'

In August 2022, Amazon announced the acquisition of iRobot, which develops the robot vacuum cleaner Roomba, for approximately $ 1.7 billion (approximately 250 billion yen). In response to Amazon's acquisition of iRobot, the European Commission, the EU's policy enforcement agency, has issued a statement officially opposing the acquisition as ``competitive concerns''.

Amazon Statement of Objections
https://ec.europa.eu/commission/presscorner/detail/en/ip_23_5990

Amazon's iRobot purchase sucks up formal competition concerns in EU | TechCrunch
https://techcrunch.com/2023/11/27/eu-amazon-irobot-statement-of-objections/

In August 2022, Amazon announced that it would acquire iRobot for approximately $1.7 billion.

Amazon to acquire iRobot, developer of robot vacuum cleaner 'Roomba', for approximately 230 billion yen - GIGAZINE

Since the beginning of the acquisition, it has been pointed out that since Amazon sells home robots and IoT products such as Astro and Echo, if the acquisition of iRobot were completed, it would lead to eliminating Amazon's biggest rival from the market. .

Experts warn that Amazon's acquisition of Roomba developer ``could be the most dangerous and threatening acquisition'' - GIGAZINE

After that, the UK's Competition and Markets Authority began investigating Amazon's iRobot, and subsequently the EU's European Commission also began an investigation, arguing that the acquisition could lead to antitrust violations. Initially, the European Commission raised the possibility that Amazon's acquisition of iRobot could restrict competition in the robot vacuum cleaner market. In addition, as a result of regulators around the world waiting for the acquisition, iRobot's debt has increased, and Amazon has reduced the acquisition price by 15%.

The European Commission begins an investigation into Amazon's acquisition of iRobot, the developer of the robot vacuum cleaner Roomba, as it may violate antitrust laws - GIGAZINE

After several months of thorough investigation, the European Commission has officially announced that Amazon's acquisition of iRobot poses ``competitive concerns''. Although this statement does not mean that the EU will formally ask Amazon to halt the acquisition, it may ask Amazon and iRobot to present a solution to eliminate the competition concerns raised by the European Commission.

The European Commission has stated that once the iRobot acquisition is finalized, Amazon will take strategies to prevent competitors from selling robot vacuum cleaners on its marketplace, and will limit the frequency with which iRobot's competitors' products appear in organic search results and ads on its marketplace. We are concerned about the possibility that companies may intentionally lower the market price or intentionally raise advertising and sales costs for rival products.

The European Commission has stated that Amazon's marketplace is a particularly important sales channel for robot vacuum cleaners in France, Germany, Italy, and Spain, and that if Amazon succeeds in acquiring iRobot, He mentioned that it would be possible to exclude rivals from the market. The European Commission pointed out that “robot vacuum cleaner users in these countries are particularly dependent on Amazon, both in terms of product discovery and in terms of final purchasing decisions.”

In addition, the European Commission concluded that ``more revenue would be gained from increasing sales of iRobot's robot vacuums than would be lost from fewer sales of iRobot's competitors' products in the marketplace.'' 'This revenue may include revenue from user data collected from iRobot users.'

For the above reasons, if Amazon restricts the sale of third-party robot vacuum cleaners on its marketplace, competition in the robot vacuum market will be restricted, product prices will rise, quality declines, and consumers' The European Commission is concerned that this could lead to a reduction in innovation. These concerns were determined by analyzing internal documents provided by Amazon and iRobot to the European Commission, and by gathering opinions from market participants such as robot vacuum cleaners, other smart home equipment suppliers, and providers of online sales channels. The European Commission said it followed an 'extensive study to understand the market and the potential impact of the transaction'.

Following this news, i Robot's stock price fell by nearly 20% .