Monday, August 22, 2005

Whirlpool-Maytag Merger

The proposed merger between Whirlpool and Maytag is getting intense scrutiny from the Department of Justice and is the suject of controversy.  According to the Des Moines Register:

"Robert Doyle, a lawyer with Sheppard, Mullin, Richter & Hampton in Washington, D.C., said a key issue in the the Maytag-Whirlpool deal is whether smaller competitors are in a position to keep the U.S. market competitive.

"If competitors such as the South Korean companies Samsung and LG "are in a position to grow and expand and keep the market competitive, then the Whirlpool deal is less of a concern," Doyle said. "But there is an issue of whether the smaller ones have the ability expand in the marketplace if the transaction is completed."

"Doyle sees "a significant antitrust question" in the deal.

"Whirlpool is the nation's largest appliance maker, with about 35 percent of the market. Maytag is No. 3, with 15 percent, but in certain sectors - washers, for example - a merged company would have a 72 percent market share in terms of unit sales, according to analysts' reports.

"Some analysts have said that number is skewed because Whirlpool builds washing machines for Sears, which sells them under its in-house Kenmore brand.

"Sears controls the pricing, and Whirlpool must periodically bid with other manufacturers to get the work.

"Without Kenmore, the market share of a combined Maytag-Whirlpool company would be slightly less than 30 percent in U.S. major appliances, Duthie said.

"Doyle, however, said regulators might require Whirlpool to sell off some portions of its business to satisfy antitrust concerns."

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