Whirlpool and Maytag have in recent weeks stepped up efforts to rally support on Capitol Hill for their $1.7bn merger in the face of criticism from some opponents in Washington who say the deal, which would combine two of the largest appliance makers in the world, is anti-competitive.
The companies have been meeting staff on the Senate antitrust committee and other lawmakers ahead of a February 27 deadline that marks the end of the Department of Justice’s ongoing review of the deal, according to two congressional staffers.
At the centre of the antitrust debate lie questions about whether foreign – especially Chinese – rivals have garnered a significant enough presence in the US market to merit a combination of two manufacturers that critics say would control up to 70 per cent of the market for washers and dryers.
The outcome of the review process is also likely to hinge on whether the DoJ includes appliances that Whirlpool manufactures for the Kenmore brand, which is owned by Sears, in its analysis of Whirlpool’s market share.
James Rill, a former antitrust official who represents Whirlpool, said the companies were holding staff-level discussions with the Justice Department on the deal. He said talks were centred on the expanding influence of foreign companies in the US appliance market, and future benefits from the “huge efficiencies” the merger would deliver. Whirlpool and Maytag are trying to shore up congressional support following a damaging assessment of the effect a merger would have on the appliance market by the American Antitrust Institute, a research organisation that says its mission is to “increase the role of competition” in the marketplace.
The AAI said the combination of “two laundry giants” would damage the market for top-loading washers – a “product for which there is no foreign competition” – and would allow the group to use its enhanced market power to pressure even powerful retailers like Lowes, Sears and Best Buy.
Although AAI considers itself an independent advocacy group, a footnote in the group’s report says that among its more than 100 contributors is “at least one organisation” whose client is an opponent of the Whirlpool-Maytag merger.
The companies are also fighting resistance to the deal by Senator Tom Harkin, an Iowa Democrat, and Congressman Leonard Boswell, who say the DoJ should force Whirlpool to divest Maytag’s washer and dryer businesses if it approves the deal.
It is far from clear, however, whether Whirlpool would agree to such a divestment even if its acquisition of Maytag hung in the balance. The company has retained the right in regulatory filings to walk away from the deal if it is required to make any divestiture.
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