November 19, 2015 / 6:41 PM / in 2 years

U.S. government, Electrolux argue at trial over GE appliance deal

WASHINGTON, Nov 19 (Reuters) - 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)

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