Amazon’s proposed $1.7 billion acquisition of the renowned robot vacuum cleaner maker, iRobot, is set to undergo a comprehensive antitrust investigation by the European Union, according to sources familiar with the matter.
This development comes just weeks after the US online retail giant received approval for the deal from the United Kingdom.
The acquisition, which Amazon announced in August last year, aims to bolster the company’s range of smart devices, including the popular Alexa voice assistant, smart thermostats, security devices, and wall-mounted smart displays.
iRobot, known for its pioneering Roomba robot vacuum cleaners since 2002, has garnered significant recognition in the market.
Upon news of the impending investigation, iRobot shares experienced a substantial decline of approximately 10%, marking their largest percentage drop since February of the previous year.
Meanwhile, Amazon shares trimmed their gains following the publication of the Reuters story.
The European Commission is scheduled to commence a four-month investigation once its preliminary review of the deal concludes on July 6.
Sources indicated that Amazon is unlikely to propose remedies during this initial phase.
However, the company will have a final opportunity in the coming days to convince the EU competition watchdog that the acquisition will promote healthy competition. Nonetheless, the odds are stacked against Amazon in this regard.
Both the Commission and Amazon declined to comment on the matter. Previously, Amazon had stated that the market for vacuum cleaners is highly competitive, with numerous Chinese players in the field.
The recent decision by the UK competition agency supported this argument, as it concluded that Amazon would not leverage its market power to disadvantage rival robot vacuum cleaner manufacturers.
Antitrust enforcers worldwide have become increasingly cautious regarding major technology companies acquiring smaller competitors.
There are concerns about the consolidation of vast amounts of data by a handful of firms, as well as the potential for dominant companies to exploit their market position in new sectors.
The outcome of the EU investigation into Amazon’s iRobot acquisition will be closely monitored, as it reflects the ongoing scrutiny and regulatory efforts aimed at addressing competition concerns in the tech industry.