Arçelik and Whirlpool deal faces in-depth probe by UK regulator

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The UK competition watchdog has threatened to open an in-depth probe into Beko maker Arçelik’s deal to buy the majority of Whirlpool’s European home appliances business due to concerns it could reduce choice for consumers and push up prices.

The Competition and Markets Authority said on Thursday that it would open a deeper investigation into the deal “unless Arçelik offers undertakings” to assuage the regulator’s fears that it “could reduce choice in the supply of washing machines, tumble dryers, dishwashers and cooking appliances”.

Sorcha O’Carroll, senior director of mergers at the CMA, said the regulator was also concerned that the tie-up could result in “people paying more or receiving lower quality products”. It has given Arçelik until October 5 to offer up potential solutions.

Turkey-based Arçelik is already one of Europe’s biggest home appliance makers, and its value-focused Beko brand is particularly strong in the British market. The group forged a deal in January to take control of three-quarters of a joint venture combining Arçelik’s European business with that of US-based Whirlpool, whose brands include Indesit and Hotpoint.

The tie-up would create a European appliances powerhouse with €6bn in annual revenue and 20,000 employees, handing Arçelik control of 14 Whirlpool-owned production facilities.

The CMA warned on Thursday that if the deal went ahead, the merged company would be the UK’s largest individual supplier of washing machines, tumble dryers, dishwashers and cooking appliances — a market worth more than £3.8bn.

“Arçelik and Whirlpool’s position is particularly strong in the low to mid-range price categories of these domestic appliances, where they would face competition from only a small number of competitors,” it said.

Arçelik said it “remains in close and constructive collaboration with the CMA in the context of the proposed transaction with Whirlpool Europe”, adding that it “will work with the CMA to address the concerns that they have raised”.

The EU competition authority has set a deadline of October 23 to make a ruling on the Arçelik-Whirlpool deal, according to a filing last week.

Arçelik’s chief executive Hakan Bulgurlu told the Financial Times in August that the Whirlpool deal would bring the group, a publicly traded subsidiary of Turkey’s Koç Holding industrial conglomerate, to a “different scale”.

“I really believe that in the long term this is a consolidating industry and the winners will be only a handful [of companies],” he said in an interview at Arçelik’s headquarters in Istanbul.

Arçelik, which generated the majority of its TL134bn ($4.9bn) in net sales last year in Turkey and Europe, has about 3.4 per cent share of the global appliance market, according to Bulgurlu. The group’s shares were little changed in Istanbul trading on Thursday.