Maytag/Whirlpool Merger Wins Clearance in DOJ Antitrust Investigation
March 31, 2006
Cleary Gottlieb successfully represented Maytag, as antitrust co-counsel with Wachtell, Lipton, Rosen & Katz, in the investigation by the Antitrust Division of the U.S. Department of Justice of Whirlpool’s $2.7 billion acquisition of Maytag. On March 29, the DOJ closed its investigation without requiring divestitures or other remedies. The merger closed on Friday, March 31.
The press followed this transaction very closely as one of the first major merger decisions under the new Assistant Attorney General for Antitrust.
The DOJ investigation focused on washers, dryers, and other home appliances. Press reports reported that the DOJ staff recommended filing a lawsuit to block the transaction based on the high combined share of Maytag and Whirlpool in washers and dryers. However, the parties and their advisors presented evidence of, among other things, strong domestic and foreign competition, rapidly changing consumer trends and marketplace conditions, and the substantial efficiencies available through the transaction.
The Cleary Gottlieb team and the other advisors worked intensely for more than seven months to develop and present arguments, evidence, and economic analysis, and to respond to questions and concerns raised by the Antitrust Division. In a detailed statement explaining the rationale for not opposing the transaction, the Antitrust Division concluded that “despite the two companies’ relatively high share of laundry product sales in the United States, any attempt to raise prices likely would be unsuccessful.” The Antitrust Division indicated that this conclusion was based on the existence of well-established U.S competitors such as Kenmore, General Electric and Frigidaire, the rapid growth of newer brands LG and Samsung in the United States, the existence of untapped manufacturing capacity in the United States, and the fact that foreign competitors such as LG and Samsung manufacture, in addition to high-efficiency front-load washers, conventional top-load models in Mexico and Asia that could be sold in the United States. The Division also noted that the total costs of purchasing and operating high-efficiency front-load washers and conventional top-load models were comparable due to the efficiency savings associated with front-load models. Finally, the Division indicated that the detailed analyses provided by the parties to support their efficiencies claims further reduced the likelihood that the transaction might harm consumer welfare.
Maytag, a $4.7 billion home and commercial appliance company, was headquartered in Newton, Iowa. Whirlpool is the world’s leading manufacturer and marketer of major home appliances, with annual sales of more than $13 billion. The company markets major brand names to consumers in more than 170 countries.