Feds sue to block General Electric-Electrolux deal
LOUISVILLE, Ky. (WDRB) – The U.S. Department of Justice filed suit on Wednesday to block Electrolux’s planned $3.3 billion purchase of General Electric’s Louisville-based appliance division.
The proposed combination "would leave millions of Americans vulnerable to price increases for ranges, cooktops and wall ovens, products that serve an important role in family life and represent large purchases for many households,” the Justice department said.
Despite the setback, GE and Electrolux said they intend to "vigorously defend" the proposed deal with an eye toward closing the transaction by the end of the year. A combined company would be better for consumer choices and prices, they argue.
In its complaint filed in federal court in Washington, D.C., the Justice Department said the "big three" -- GE, Electrolux and market-leader Whirlpool -- control 90 percent of the market for cooking appliances like stoves and ovens sold to homebuilders, multi-family apartment builders and other bulk buyers.
Joe Sims, Electrolux's lead attorney on the deal, said that figure understates the role of Samsung and LG. Sims added that Electrolux's portion of the homebuilder business is negligble and that it's really Whirlpool and GE that dominate the market.
Sims told reporters Wednesday that he was baffled by the Justice Department's opposition to the deal, which he said was overly reliant on figures and ignored the realities of the market for cooking appliances.
"I wish I could explain to you why this case was filed, but frankly I can’t," Sims said.
Sims said Whirpool's 2006 acquisition of Maytag -- which the Justice Department, then under President George W. Bush, did not block -- should be the template for the GE-Electrolux combination. Appliance prices did not rise after the Whirlpool-Maytag merger, Sims said.
Despite the setback, Sims said the deal can still close by the end of the year, even if a settlement cannot be reached with the Justice Department and a judge decides the case.
Sims referenced the 2014 American Airlines-US Airways merger, which the Justice Department also sued to block before reaching a settlement that allowed the merger to go forward.
Since the deal was announced last September, the fate of about 2,200 white-collar jobs at GE's appliance headquarters in Louisville has been an open question. Electrolux's U.S. headquarters is in Charlotte, and the company promised investors about $300 million in annual cost savings from combining the companies.
Meanwhile, the about 3,800 production workers at Appliance Park, represented by IUE-CWA Local 761, voted on Tuesday to accept a nationally negotiated four-year bargaining contract with GE.
Local 761 President Dana Crittenden said Wednesday that employees are indifferent about whether the sale goes through.
"Whether we’re owned by GE or by Electrolux, we’re here to work everyday," he said.
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