The European Union antitrust regulators are set to block the tech giant’s $1.4 billion acquisition of iRobot, a leading robot vacuum maker. Three individuals familiar with the matter revealed on Friday that the decision is rooted in concerns that the deal could stifle competition in the burgeoning market for robot vacuum cleaners, reported Reuters.
Despite a warning from the European Commission, Amazon declined to provide remedies to address competition issues last week. The Commission, slated to make a final decision by February 14, has refrained from commenting on the ongoing situation, as has Amazon.
The primary apprehension of EU regulators revolves around the possibility that Amazon could use its dominance on the online marketplace to undermine iRobot’s competitors, particularly in key European markets such as France, Germany, Italy, and Spain.
According to Reuters, this move is seen as part of a broader effort by antitrust enforcers to intensify scrutiny of major deals involving tech giants, given the potential implications for fair competition.
While the concerns raised could theoretically be addressed under the newly enforced EU tech rules, known as the Digital Markets Act, regulators argue that the lengthy enforcement process and the absence of legal challenges to the legislation mean that blocking the deal outright is a more prudent course of action.
One of the sources mentioned that a veto would set a precedent, raising the bar for future Amazon acquisitions in the EU, as antitrust enforcers may demand substantial remedies in exchange for their approval.
The news has already had a significant impact on iRobot’s market value, with shares plummeting by 30% in late trade. Investors are closely watching the unfolding developments as they await the final decision from the European Commission on this high-stakes acquisition.