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Whirlpool, Maytag Will Merge by Monday
Mar 30, 2006
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Whirlpool Corporation Executive Vice President, Market Operations, W. Timothy Yaggi told APPLIANCE magazine yesterday evening that the merger transaction with Maytag Corporation will happen on Monday, April 3, if not sooner.

The U.S. Department of Justice (DOJ) cleared Whirlpool's acquisition of Maytag yesterday afternoon. The Antitrust Division decided the merger would not pose a threat to competition in the U.S. appliance industry.

"The combination of strong rival suppliers with the ability to expand sales significantly and large cost savings and other efficiencies that Whirlpool appears likely to achieve indicates that this transaction is not likely to harm consumer welfare," the DOJ statement said.

Of special concern to the DOJ was the large share of the U.S. laundry appliances market that would be held by the merged corporations. Some industry watchers speculated that the merger would only be approved on the condition that part of the laundry business was sold off.

The DOJ confirmed in its statement yesterday that it did focus its investigation on the residential laundry business, but in the end did not believe the merged companies would have the power to dictate market prices.

Market Share Distinctions

Some industry watchers are reacting with surprise today that the DOJ approved the merger without requiring the sell-off of the laundry business. The DOJ statement said that, while Whirlpool and Maytag represent well-known brands, rivals like Kenmore, GE and Frigidaire are well established, and newer brands have established themselves in recent years.

Kenmore laundry appliances, in fact, are produced by Whirlpool. Whirlpool, however, argued prior to the DOJ approval that its share of the market of units manufactured should not be confused with the share of the market it controls. After all, Sears could easily move to a different supplier for Kenmore laundry appliances.

The distinction was important because it impacted the potential ability that a combined Whirlpool/Maytag would have to manipulate the laundry appliances market. A company with two-thirds of the market might have the ability. Whirlpool's Kenmore manufacturing does not give it that control. Any attempt by Whirlpool to raise prices exorbitantly would send Sears to another manufacturer – and as the DOJ pointed out, there is no shortage of manufacturing capacity in the U.S.

The DOJ said the other large retailers of appliances in the U.S. - Lowe’s, The Home Depot and Best Buy – also wield enough market influence to make the specter of price manipulation a non-issue.

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