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Lawyer Makes The Case For Electrolux-GE Merger

WASHINGTON – Electrolux’s legal team provided a preview of its defense against the anti-trust suit filed by the Department of Justice (DOJ), intended to derail the company’s planned $3.3 billion acquisition of GE Appliances.

Speaking at a legal briefing earlier this month, Joe Sims, a partner at the international law firm Jones Day, said Electrolux remains open to negotiations with DOJ, and is “perfectly willing to come to some acceptable,” if unspecified, accommodation with the agency, even though several months of prior debate proved futile.

Short of that, the vendor is prepared to “vigorously contest” the federal lawsuit, he vowed, citing five core arguments:
1. “You don’t see any indications that there are a lot of complaining customers out there,” Sims said.
2. “The U.S. market is the most open market in the world,” as demonstrated by the combined 20 percent market share that LG and Samsung have amassed in the last decade.
3. “The customer base is extremely concentrated,” with Top Five retailers Lowe’s, Sears, Home Depot, Best Buy and hhgregg accounting for over 80 percent of all appliance sales. As a result, Sims said, “They have rather considerable bargaining leverage with appliance suppliers and they exercise that leverage all the time.”
4. The builder channel is similarly concentrated.
5. Following the Whirlpool-Maytag merger, quality went up and margins and real prices went down, proving “pretty conclusively” that the acquisition wasn’t anti-competitive.

While Electrolux and DOJ have remained mum in the ensuing days, readers have not, with comments on our Talkback feature largely disparaging the Justice Department’s action.

“I see this move eventually killing GE, and LG will pick up their business,” wrote one observer. “Ludicrous,” agreed reader Eddie Willers.

And regular commentator “Wong Chee” weighed in with this: “We are going in a global economy, get used to it! As far as the Justice department is concerned, they are sabre rattling to show they did their due diligence, but this deal will go down.”

In the meantime, a report in the Louisville Business First, which covers GE’s headquarters’ town, described the mood at the company’s Appliance Park production facilities as “uncertain.”

“We really have no control over this,” union president Dana Crittendon told the newspaper. “It just adds a little tension.”