WHR Whirlpool Corp

   (FROM THE WALL STREET JOURNAL 11/10/15) 
   By Brent Kendall 

WASHINGTON -- The Justice Department jousted with Electrolux AB and General Electric Co. on Monday during the first day of an antitrust trial that will determine whether the companies can proceed with a deal that could remake the U.S. appliance market.

The government is challenging Electrolux's proposed $3.3 billion deal to buy GE's appliance business, arguing the transaction would diminish competition and spark higher prices for cooking appliances.

In his opening statement, Justice Department lawyer Ethan Glass said competition between GE and Electrolux has benefited appliance consumers for a generation. If the acquisition isn't stopped, Electrolux will sell two out of every three ranges sold in the U.S. and prices could rise by 5% or more, he said.

"That is real money that American consumers will have to pay," he told U.S. District Judge Emmet G. Sullivan, who is presiding over the case.

Mr. Glass said a post-acquisition Electrolux and remaining rival Whirlpool Corp. would make nearly 90% of the ranges sold in the U.S. He offered sharp words for Whirlpool, saying the company has been actively supporting the deal between its two largest rivals and is cooperating with them to get it approved.

A Whirlpool spokeswoman said the company "is not a party to this lawsuit and we do not comment on legal cases involving our competitors."

The Justice Department's presentation on Monday focused more heavily on the retail market than the government did when it initially filed its lawsuit in July.

Earlier, it argued primarily that the deal would harm so-called contract-channel purchasers, like home builders and property managers, that buy in bulk. Mr. Glass continued to press that argument, but he also devoted considerable time to arguing that the transaction would hurt value-minded retail customers looking for lower-priced cooking appliances.

Electrolux and GE said the government's case is misguided and ignores market realities, including the increasing presence of overseas firms like Samsung Electronics Co. and LG Electronics Inc., brands they said are popular with today's coveted younger buyers. They also cited looming competition from China's Haier Electronics Group and Turkey's Arcelik AS.

"New firms enter. Old firms either keep up or lose share," said GE lawyer Paul Denis. The court, he said, could watch this competition unfold during the holiday shopping season that will play out alongside the trial, adding that early holiday-season data from Home Depot Inc. shows Samsung "is crushing it."

The Electrolux deal, first announced in September 2014, is part of GE's plan to shift away from consumer-focused businesses toward tech-heavy industrial products.

The shadow of a previous appliance-industry merger, Whirlpool's 2006 acquisition of Maytag Corp., could loom over the case. The Bush Justice Department allowed that transaction, and GE and Electrolux believe their transaction is similar.

The trial is slated to last about three weeks. Judge Sullivan is expected to rule early next year.

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(END) Dow Jones Newswires

November 10, 2015 02:48 ET (07:48 GMT)

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