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From Antitrust Law Daily, December 7, 2015

Electrolux abandons acquisition of GE appliance unit

By Jeffrey May, J.D.

The Department of Justice Antitrust Division has successfully blocked the proposed $3.3 billion acquisition of General Electric Company's appliance business by rival AB Electrolux. Nearly a month into a sometimes contentious bench trial to enjoin the transaction, GE terminated an agreement under which it was to sell its appliance unit to Electrolux.

The trial, which began on November 9 in the federal district court in Washington, D.C., had been expected to wrap up shortly. The government rested its case in late November. The defendants moved for judgment, and the motion was taken under advisement. Last week, the defendants were given an opportunity to put on their defense of the transaction. It had been anticipated that a decision would be handed down by U.S. District Judge Emmet G. Sullivan in January.

The Justice Department filed its complaint on July 1, alleging that the acquisition would combine two of the leading manufacturers of ranges, cooktops, and wall ovens sold in the United States. Electrolux makes and sells major appliances under the brand names Frigidaire, Tappan, and Electrolux. GE makes and sells major appliances under a number of brand names, including GE, GE Monogram, and Hotpoint. According to the government, the merger would have brought together two of the three iconic appliance manufacturers, leaving Electrolux and Whirlpool Corporation as the dominant players. In 2006, the Justice Department cleared Whirlpool's acquisition of Maytag Corporation without taking action.

Justice Department reaction. The Justice Department announced the abandonment of the transaction this morning, saying that Electrolux and General Electric “could not overcome [the] reality at trial” that the “deal was bad for the millions of consumers who buy cooking appliances every year.”

“In the courtroom, facts matter,” said David I. Gelfand, Deputy Assistant Attorney General of the Department of Justice Antitrust Division. “Rhetoric does not.”

Gelfand touted the government's trial team, led by Ethan Glass. “The abandonment of the transaction is a testament to their tremendous dedication and the thoroughness with which they presented the evidence to the Court.”

At a press conference this afternoon, Gelfand noted that the government’s decision to allow the Whirlpool/Maytag in 2006 did not offer any support for the Electrolux acquisition of GE’s appliance unit. He contended that the earlier deal was irrelevant in that it occurred ten years earlier and involved very different circumstances. Gelfand suggested that it would be difficult to compare the outcome of the proposed Electrolux/GE deal with the outcome of the Whirlpool/Maytag transaction, since the earlier deal was followed by the great recession.

The deputy assistant attorney general also defended the economic evidence that the government put forward to make its case. “We did not simply look at market shares,” Gelfand said. He contended that the data, documents, and testimony came in as he thought it would at trial.

GE statement. GE intends to continue its efforts to sell the appliance unit, according to a statement released by the company today. GE noted that it was entitled to a $175 million break-up fee from Electrolux.

Attorneys: Ethan Glass for U.S Department of Justice. John Majoras (Jones Day) for AB Electrolux. Paul T. Denis (Dechert, LLP) for General Electric Co.

Companies: AB Electrolux; Electrolux North America, Inc.; General Electric Co.

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