Brussels send Amazon concerns over iRobot acquisition

(BRUSSELS) - The EU Commission informed US tech giant Amazon Tuesday of its preliminary view that its proposed acquisition of iRobot may restrict competition in the market for robot vacuum cleaners ('RVCs').

The Commission opened an in-depth investigation on 6 July to assess if Amazon's acquisition of iRobot may (i) restrict competition in the market for the manufacturing and supply of RVCs; and (ii) allow Amazon to strengthen its position in the market for online marketplace services to third-party sellers (and related advertising services) and/or other data-related markets.

As a result of the probe the Commission is concerned that Amazon may restrict competition in the European Economic Area ('EEA')-wide and/or national markets for RVCs, by hampering rival RVC suppliers' ability to effectively compete.

In particular, the Commission found that:

• Amazon may have the ability and the incentive to foreclose iRobot's rivals by engaging in several foreclosing strategies aimed at preventing rivals from selling RVCs on Amazon's online marketplace and/or at degrading their access to it. This may include: (i) delisting rival RVCs; (ii) reducing visibility of rival RVCs in both non-paid (i.e., organic) and paid results (i.e., advertisements) displayed in Amazon's marketplace; (iii) limiting access to certain widgets (e.g. 'other products you may like') or certain commercially-attractive product labels (e.g. 'Amazon's choice' or 'Works With Alexa'); and/or (iv) directly or indirectly raising the costs of iRobot's rivals to advertise and sell their RVCs on Amazon's marketplace. Amazon may have the ability to foreclose iRobot's rivals because Amazon's online marketplace is a particularly important channel to sell RVCs in France, Germany, Italy, and Spain. RVC customers in these countries particularly rely on Amazon both in terms of product discovery as well as for their final purchasing decision.
• Amazon may have the incentive to foreclose iRobot's rivals because it may be economically profitable to do so. The merged entity would likely gain more from additional sales of iRobot RVCs, than it would lose from fewer sales of iRobot's rivals and other related products on Amazon. Such gains include benefits from additional data gathered from iRobot's users.
• Such foreclosure strategies could restrict competition in the market for RVCs, leading to higher prices, lower quality, and less innovation for consumers.

The Commission says it investigation has included analysing internal documents provided by the parties and gathering views from market participants such as suppliers of RVCs and other smart home devices, as well as from providers of online sales channels.

The Commission stresses that the sending of a Statement of Objections does not prejudge the outcome of the investigation. Amazon now has the opportunity to reply to the Commission's Statement of Objections, to consult the Commission's case file and to request an oral hearing.

More information will be available on the Commission's competition website, in the public case register under the case number M.10920.