WASHINGTON Nov 19 AB Electrolux's
CEO argued on Thursday that his company should be allowed to buy
General Electric's appliance business despite documents
describing a consolidated U.S. market, saying that the GE deal
would not push up prices for consumers.
The Department of Justice asked a federal court in July to
stop Sweden's Electrolux, which makes Frigidaire, Kenmore and
Tappan appliances, from buying GE's appliance business for $3.3
billion and has said the deal would push prices up by five
percent. The department has asked Judge Emmet Sullivan for an
injunction to stop the deal.
Under questioning from the Justice Department's Steven
Kramer, Chief Executive Keith McLoughlin acknowledged that
Electrolux had repeatedly described the U.S. market for
appliances as relatively consolidated compared to the more
fragmented European market.
Pushed by Kramer to acknowledge that fewer players in a
market would lead to less competition on price, McLoughlin said:
"Oh, my word, I haven't said that at all."
He also acknowledged price increases in the United States
but argued some, particularly a 2005 increase, was prompted by
increases in major inputs like steel, nickel and petrochemicals.
"I was there. I was running the business," said McLoughlin,
a former head of Electrolux's Major Appliances North America.
"Our assumption is that we would not have increase pricing
power (if the GE deal goes forward)," he said because LG,
Samsung, Haier and others began entering the market several
years ago. "It's a freight train."
The Justice Department is focusing on lower end kitchen
appliances, the type that home builders put in new houses and
apartments or that consumers buy at big box stores. It said that
Electrolux, GE and Whirlpool make 90 percent of the stoves and
ovens sold to big builders and property managers.
The two sides have held settlement talks but failed to find
agreement on which assets Electrolux could sell in order to make
the GE deal palatable to the Justice Department.
The case is United States v AB Electrolux and General
Electric Co, in the U.S. District Court for the District of
Columbia, No. 15-1039.
(Reporting by Diane Bartz; Editing by Bernard Orr)