The UK Competition and Markets Authority (CMA) has launched an investigation into Amazon’s $1.7 billion acquisition of iRobot, a manufacturer of high-end vacuum cleaners and other home cleaning products.
The acquisition was completed in December 2022, but concerns have been raised about the potential impact on competition in the UK’s online retail market. The CMA has the power to review mergers and acquisitions that may result in a substantial lessening of competition.
In a statement, the CMA said it would be investigating whether the acquisition could result in a substantial lessening of competition in the UK’s online retail market. The regulator is particularly concerned about the impact on consumers who may be faced with higher prices or a reduced choice of products as a result of the acquisition.
“The CMA will consider whether the merger could lead to a substantial lessening of competition within any market or markets in the UK for goods or services,” the regulator said in a statement. “This includes considering the impact of the merger on the ability of consumers to purchase products or services at competitive prices.”
The investigation will also examine the extent to which Amazon and iRobot compete with each other in the UK, and whether the acquisition will lead to a reduction in the quality or range of products and services offered by other retailers in the online market.
This is not the first time that Amazon has faced scrutiny from the CMA. In 2019, the regulator launched an investigation into Amazon’s investment in Deliveroo, a food delivery company. The CMA eventually cleared the deal after finding that it would not substantially lessen competition in the UK market.
Amazon and iRobot have yet to comment on the investigation. However, the two companies have previously stated that the acquisition would allow them to combine their strengths in online retail and home cleaning products, creating new opportunities for growth and innovation.
iRobot is best known for its Roomba line of robotic vacuum cleaners, which have become increasingly popular in recent years. The company also produces other home cleaning products, such as mops and floor scrubbers.
Amazon, on the other hand, is one of the largest online retailers in the world, with a vast array of products and services available to customers. The company has been expanding its presence in the home automation market in recent years, with products such as the Echo smart speaker and the Ring doorbell.
The acquisition of iRobot is part of Amazon’s strategy to expand its presence in the home automation market and offer customers a wider range of products and services. The deal is also expected to give Amazon a stronger foothold in the highly competitive online retail market, where it faces stiff competition from rivals such as Walmart and Target.
The CMA’s investigation is likely to take several months to complete. If the regulator finds that the acquisition could result in a substantial lessening of competition in the UK market, it could order Amazon to divest certain assets or take other measures to address the concerns.
The investigation is just the latest example of the increased scrutiny that technology companies are facing from regulators around the world. In recent years, companies such as Google, Facebook, and Apple have all faced antitrust investigations and fines for allegedly engaging in anti-competitive practices.
The CMA’s investigation into Amazon’s acquisition of iRobot highlights the growing concerns around the impact of big tech companies on competition in the online retail market. While Amazon and iRobot have stated that the acquisition will allow them to create new opportunities for growth and innovation, the CMA will be examining whether the deal could result in higher prices or a reduced choice of products for consumers. The investigation is likely to be closely watched by regulators and industry players alike, as they seek to balance the benefits of innovation and growth with the need to protect competition in the marketplace.
By: Muskan kumari, BBA LL.B 4th year from THE ICFAI UNIVERSITY, RANCHI, JHARKHAND
