GE-Electrolux trial | Everything you need to know
LOUISVILLE, Ky. (WDRB) -- On Monday, General Electric and Electrolux begin a weeks-long trial against the U.S. Justice Department that will determine the fate of Electrolux’s $3.3 billion acquisition of GE’s Louisville-based appliance division.
The deal is of great interest locally as GE has some 3,800 hourly workers at Appliance Park and another 2,200 salaried, white-collar employees who run the appliance division -- all of whom will have a new employer if the sale closes.
Here’s an overview of the trial based on electronic court records from U.S. District Court in Washington D.C., where it will take place.
The key issue
The case started when the Justice Department sued on July 1 to block the deal on antitrust grounds. The government argues that a GE-Electrolux 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.”
In particular, the deal would negatively affect the market for cooking appliances like stoves and ovens sold to homebuilders, multi-family apartment builders and other bulk buyers, according to the Justice Department’s complaint.
GE and Electrolux have two main defenses: That the appliance market is very competitive, and the government’s analysis fails to consider recent entrants like Samsung and LG. And, they argue that the 2006 merger Whirlpool-Maytag merger – which the Bush administration’s Justice Department allowed – did not raise appliance prices.
The trial witness list includes 29 people, most of whom are business executives. Each side has an economic expert, as well.
Judging by the time allotted to each witness, two of the people whose testimony will be most important are Electrolux CEO Keith McLoughlin and Chip Blankenship, CEO of GE’s Louisville- based appliance division.
Electrolux’s former U.S. division chief, Jack Truong – who was fired earlier this year – is also on the witness list.
U.S. District Court Judge Emmet Sullivan. There will not be a jury.
The trial is scheduled to last through Nov. 24, the Tuesday before Thanksgiving. It could reconvene for one more week following the holiday, if necessary. Then each side has 10 days following the end of the trial to file final briefs.
Electrolux has maintained all along that it still plans to close the sale of GE Appliances by the end of the year.
Is that still realistic, given the court’s timeline?
Electrolux spokeswoman Eloise Hale said Thursday: “Our ambition is to resolve this by the end of the year.” Does that mean to resolve the case, or to close the sale? Hale did not respond to a follow-up message.
Because of the effects the merger could have, a number of other businesses have had to respond to subpoenas and make executives available for testimony as part of the case. These companies are among the participants in the case:
- Retailers Home Depot, Lowe’s and Best Buy
- Home builders D.R. Horton, Pulte Homes and First Texas; Cavco, producer of manufactured homes; and Bozzuto, a real estate development and construction company
- Appliance manufacturers Whirlpool, Samsung, LG and Haier
Thousands of exhibits including internal business emails, strategic plans and presentations have been produced for the trial, and the government has often been at odds with GE and Electrolux over just how much of the evidence should be made public.
GE and Electrolux – and many of the other companies like Samsung and LG who have been dragged into the litigation – warn of serious harms to their businesses if sensitive plans are revealed to competitors.
In a letter to the court dated Thursday, a Samsung attorney said his company the other “non-parties” to the case do not want “business strategies and plans that are the fruit of millions of dollars of employee, contractor and consultant time” to be revealed.
But last month, the Justice Department told the judge that GE and Electrolux’s request to make trial exhibits confidential would “basically mean the entire trial – from opening to closing – would be closed to the public.”
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