Shares of iRobot plummeted on Monday after the European Commission voiced concerns regarding Amazon's proposed $1.7 billion purchase of the Roomba manufacturer. The EC expressed concern that Amazon may have the ability to obstruct or reduce access to the online platform of rival iRobot. Meanwhile, the U.S. Federal Trade Commission is conducting an investigation on the matter.
Shares of iRobot fell sharply by 17% Monday after the European Union's antitrust regulator expressed worries that Amazon's proposed $1.7 billion acquisition of the Roomba maker may impede competition in the market for robotic vacuum cleaners. The commission's investigation into the acquisition, which was opened in July, is expected to culminate in a ruling by February 14th. In a statement, the commission said it notified Amazon of its "preliminary view that its proposed takeover of iRobot could potentially restrict competition in the robot vacuum cleaner sector." A representative from Amazon has spoken to CNBC, claiming that the organization believes the purchase would provide iRobot with resources to further innovation and reduce costs for buyers. After the announcement, iRobot stock was paused for a moment on Monday afternoon, while Amazon went up by 1.4%. The Federal Trade Commission and the Competition and Markets Authority of the U.K. have both been reviewing the agreement since Amazon declared its intentions to purchase iRobot for $61 a share in August, with the latter having determined that the acquisition wouldn't result in a "significant decrease in competition". The commission's statement came after Reuters reported that the deal was likely to gain unconditional EU antitrust approval, according to three sources with knowledge of the situation. On Monday, the commission said it had deduced that Amazon could prevent competitors of iRobot from accessing its online page by taking products off the site or reducing their visibility in search results or other highly visible areas. Officials also stated that Amazon may be incentivized to "undermine iRobot's rivals" since it may be economical to do so.
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