Competition watchdog launches full-scale probe into Hotpoint-Beko merger

11 October 2023 , 09:22

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The decision was made after both companies failed to alleviate the regulator's concerns. (Image: (PA))

The Competition and Markets Authority (CMA), Britain's competition watchdog, is set to launch a comprehensive investigation into the proposed merger between the electrical and white goods giants behind Hotpoint and Beko in Europe. This comes amid concerns that the deal could potentially limit consumer choice and inflate prices.

The CMA has decided to refer the takeover of Whirlpool's European domestic appliances business by Turkish firm Arcelik for an in-depth phase two investigation. This decision was made after both companies failed to propose measures to alleviate the regulator's concerns.

Last month, the CMA expressed worries that the merger could result in diminished competition in the UK's supply of major household appliances. If the merger proceeds, the combined company would become the largest supplier of washing machines, tumble dryers, dishwashers, and cooking appliances in the UK, a market valued at over £3.8 billion, as per the CMA's estimates.

Whirlpool manufactures household appliances, including the Hotpoint and Indesit brands, while Arcelik produces home appliances and consumer electronics under the Beko and Grundig brands.

The CMA previously noted that Arcelik and Whirlpool have a "particularly strong position in the low to mid-range price categories of these domestic appliances, where they would face competition from only a small number of competitors."

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Following the initial probe, Sorcha O'Carroll, the CMA's director of mergers, cautioned that the merger "could reduce the choice of suppliers available to retailers and ultimately to shoppers".

"As competition from other suppliers in the low-mid price range appears to be limited, we are concerned that this tie-up could leave people paying more or receiving lower quality products," she added last month.

Upon announcing plans for a more comprehensive investigation, the CMA revealed that both companies had informed the regulator that they would not be addressing these initial concerns by the October 5 deadline.

The agreement was publicised in January, with intentions for a new company to be established, comprising of Arcelik and Whirlpool's European domestic appliances businesses.

As per the agreement, Arcelik would possess 75% of the combined company and Whirlpool the remaining 25%.

The EU competition watchdog is also scrutinising the deal and is expected to reach a decision by October 23.

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Steve Charnock