Amazon/iRobot: Does Amazon Have An Incentive To Preference Its Own Products?

Previously, we reported on Amazon’s acquisition of iRobot, the robot vacuum cleaner (“RVC”) brand, for $1.7 billion. The UK Competition and Markets Authority (“CMA”) has now granted clearance at Phase 1, but the case has been referred to Phase 2 for a thorough investigation by the European Commission. This has led to differing outcomes between London and Brussels, prompting curiosity about the reasons behind it.

It’s important to note that the CMA’s complete Phase 1 decision is yet to be released. Only a six-page summary is available, but it provides valuable insights into the CMA’s approach. During Phase 1, the CMA examined three potential theories of harm.

Firstly, it assessed a theory of harm based on horizontal effects, where the merger could prevent Amazon from becoming a potential competitor in the manufacturing and selling of RVCs. However, the CMA found that there were already six competitors in the market, with iRobot being only the third largest. Consequently, the removal of a potential entrant like Amazon was deemed unlikely to create a competition issue, which was the conclusion drawn by the CMA in this case.

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