Amazon shuts down iRobot acquisition following EU regulators’ concerns

E-commerce giant Amazon has given up on its bid to acquire the smart vacuum cleaner manufacturer iRobot, following EU regulators’ concerns about it possibly restricting competition in the product’s market.

American multinational technology company Amazon announced in August 2022 its intention to purchase iRobot, which makes the Roomba robotic vacuum cleaners and sells them on Amazon’s online marketplace. The merger would have been a $1.4 billion deal.

The two companies have signed a termination agreement that resolves all outstanding matters from the transaction, including the previously agreed-upon termination fee of Amazon paying iRobot.

The European Union opened an in-depth investigation into the merger in July due to concerns that it would restrict competition in the market for the manufacturing and supply of smart vacuum cleaners and would strengthen its position in the market for online marketplace services to third-party sellers and related advertising services, as well as other data-related markets.

Blocking the deal means that Amazon could not prove the EU otherwise, even though an Amazon spokesperson said in July they would continue addressing the European Commission’s questions and concerns.

Since July, Amazon has also not filed concessions to the EU about the acquisition, according to the Commission’s website, which usually means the tech giant did not manage to find remedies that would smoothen the antitrust concerns.

EU Commission deepens investigation into Amazon’s iRobot takeover

The European Commission has opened an in-depth investigation into the proposed Amazon acquisition of smart vacuum cleaner manufacturer iRobot, over concerns that it could restrict the competition in the product’s market.

“This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable”, said David Zapolsky, Amazon SVP and General Counsel.

“Mergers and acquisitions like this help companies like iRobot better compete in the global marketplace, particularly against companies, and from countries, that aren’t subject to the same regulatory requirements in fast-moving technology segments like robotics”.

Zapolsky also added that “undue and disproportionate regulatory hurdles discourage entrepreneurs, who should be able to see acquisition as one path to success, and that hurts both consumers and competition—the very things that regulators say they’re trying to protect”.

In its preliminary findings, the EU competition department voiced concerns that Amazon could be able to exclude iRobot’s rivals from its marketplace, for example, by favouring iRobot’s results in advertising while preventing rivals’ purchase of advertising.

The company could also raise the costs for the rivals to sell their competing devices on Amazon Stores or access buyers’ data, such as information provided by the users, information collected by the RVCs and information collected from third parties. For example, if iRobot allows it, this could help with targeted advertising.

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Colin Angle, the founder of iRobot, said that the company will now turn “toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations that make life better and that our customers around the world love”.

Via the Merger Regulation, the Commission can assess mergers and acquisitions in case of companies with a turnover above a certain threshold, and block mergers that would prevent competition in the European Economic Area.

The British Competition and Markets Authority also examined whether the merger would harm competition. Still, Colin Raftery, senior director of mergers at the UK authority, told Bloomberg in June that after it had been thoroughly investigated, they were “satisfied that the deal would have no impact on competition in the UK”.

[Edited by Luca Bertuzzi/Zoran Radosavljevic]

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