CMA Launches Probe into Amazon : iRobot Deal – 21 April 2023

The regulator in the UK Initiates Investigation into Amazon’s Proposed Acquisition of iRobot.

• The Competition and Markets Authority (CMA), which is Britain’s competition regulator, has announced that it has launched an initial probe into Amazon.com Inc’s planned acquisition of iRobot Corp. The deal, which is worth $1.7 billion, was announced in August last year and is already being reviewed by the US Federal Trade Commission.
• The CMA has said that it will be conducting a “Phase 1” probe, which is a preliminary investigation to determine whether there are any competition concerns. This probe comes at a time when antitrust regulators around the world are becoming increasingly wary of large companies acquiring smaller rivals.
• In its announcement, the CMA said that “The initial period defined in section 34ZA(3) of the Act in relation to the Merger will therefore commence on the first working day after the date of this notice, ie on 19 April 2023. The deadline for the CMA to announce its decision whether to refer the Merger for a Phase 2 investigation is therefore 16 June 2023.”
• The CMA will be looking at whether the Amazon-iRobot deal will reduce competition in the market for smart home devices. The acquisition would allow Amazon to expand its portfolio of smart home devices with the addition of iRobot’s Roomba vacuum cleaner. This would give Amazon a stronger position in the market for smart home devices, which is currently dominated by companies such as Google and Apple.
• The CMA will also be examining whether the acquisition will result in higher prices for consumers, a reduction in choice, or a decline in the quality of the products on offer.
• The Amazon-iRobot deal is just one of many deals that are currently being scrutinized by antitrust regulators around the world. In the US, the Federal Trade Commission and the Department of Justice are currently investigating several large technology companies, including Amazon, Google, and Facebook, over allegations that they are engaging in anticompetitive practices.
• In the European Union, regulators are also taking a tougher stance on tech companies. In 2018, the European Commission fined Google €4.34 billion ($5.1 billion) for abusing its dominant position in the mobile phone market. Last year, the European Commission launched two antitrust investigations into Apple’s App Store and Apple Pay.
• The increasing scrutiny of large technology companies is driven by concerns that they are becoming too powerful and that their dominance in specific markets is stifling competition. There are also concerns that these companies are collecting too much data on their users and that they are not doing enough to protect the privacy of their users.
• In response to these concerns, some governments are considering new regulations to curb the power of large tech companies. For example, in the US, several states have passed laws that make it easier for individuals to sue tech companies over antitrust violations. In the EU, regulators are considering new rules that would force large tech companies to share their data with smaller rivals.
• The Amazon-iRobot deal is likely to be closely watched by regulators around the world. If the CMA finds that the acquisition will harm competition, it could refer to the value for a more in-depth “Phase 2” investigation. If the deal is ultimately blocked, it would be a blow to Amazon’s plans to expand its presence in the market for smart home devices.