Maytag, Whirlpool lobby for merger approval

Maytag, Whirlpool lobby for merger approval
 
Date January 27, 2006
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

Maytag and Whirlpool have stepped up efforts to gain support on Capitol Hill for their planned $1.7 billion merger in the face of some criticism that the move would be anticompetitive.

The Financial Times of London reported on Thursday that Maytag and Whirlpool representatives have been meeting with staff members on the Senate antitrust committee to gain support for the merger that would create the world’s largest home appliance manufacturer.

Citing congressional staffers as the source, the newspaper said company representatives have been meeting with lawmakers and Justice Department officials in advance of the Feb. 27 deadline for review of the merger proposal.

At issue is whether new global competitors in the appliance industry have gained enough presence in the United States to merit a combined Maytag/Whirlpool organization that some say would capture up to 70 percent of the market for clothes washers. The companies argue that figure is elevated because Kenmore washers made by Whirlpool for Sears should not be included in the equation.

Two weeks ago, Democratic members of the Iowa congressional delegation wrote the Justice Department to oppose the deal. Sen. Tom Harkin and Rep. Leonard Boswell said the combined companies would create an anticompetitive atmosphere in the U.S. home appliance marketplace. At a minimum, the lawmakers said, Whirlpool should be required to divest Maytag‘s laundry operations as part of the deal.

Last week, the American Antitrust Institute, a non-profit research organization that works to promote competition in the marketplace, released a report stating a combination of the nation’s number one and number three appliance manufacturers would have damaging effects for consumers. The organization said a merger of the companies would damage the market for top-load washers — a “product for which there is no foreign competition” — and allow the companies to use its new-gained market power to pressure large retailers like Lowes, Sears and Best Buy.

Maytag, following the Iowa lawmakers’ letter of opposition, said opponents of the move were ignoring “fundamental competitive realities of the appliance industry.”

“The four largest U.S. retailers now control over 65 percent of U.S. appliance sales, and, as a result, exert tremendous pressure on appliance suppliers to be competitive on price and features,” Maytag said challenging the lawmakers’ letter to the Justice Department.

Maytag added the transaction will result in “significant efficiencies” that will make the combined firm better able to compete with growing foreign competition, like LG, Samsung, Haier and Bosch-Siemens, that are expanding rapidly at U.S. retail outlets.

Also on Thursday, Maytag announced that it will release fourth quarter and full year 2005 financial results on Friday, Feb. 3. Whirlpool will announce its earning results the previous day.

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