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UK competition regulator greenlights Amazon's billion-dollar purchase of iRobot

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Back in August 2022, Amazon purchased the iRobot Corporation, otherwise known as iRobot, for $1.7 billion. The decision however led to concerns by the UK Competition and Markets Authority (CMA) causing it to reject the acquisition.

Recently, the UK antitrust regulator was also seen having issues with Microsoft where it rejected the company’s plan to purchase Activision Blizzard. In that matter, the CMA argued Microsoft would get an unfair advantage in the cloud gaming industry. While this case is ongoing with the most latest update in May 2023, today’s press release puts an end to the Amazon and iRobot case.

The CMA has given Amazon the green light to proceed with the acquisition in the UK. Initially, it expressed three major concerns due to which it rejected the decision.

First, the CMA was concerned whether Amazon proceeding with the acquisition could result in the loss of potential competition among robot vacuum cleaner suppliers. Also, if the acquisition did not happen, whether Amazon would enter the market and compete in the industry or not.

The second concern was whether Amazon would put other rivals in the industry at a disadvantage because of the market share its online platform possesses. According to the CMA, Amazon’s online store accounts for the majority of the robot vacuum cleaner sales in the UK, hence, giving the company an upper hand.

Lastly, the CMA was concerned whether the iRobot vacuum cleaners could be an important input for “smart home” platforms and whether by proceeding with the acquisition, Amazon could pose a threat to smart home rivals as well.

Colin Raftery, Senior Director of Mergers at the CMA, elaborated on the regulator's decision stating:

“More people are choosing to use ‘smart’ tech in their homes – whether that’s listening to the radio through a smart speaker, answering the door using a video doorbell, or keeping floors clean with robot vacuum cleaners.

That’s why it’s important to ensure tech firms that already benefit from powerful positions aren’t able to use those positions to undermine competitors at the expense of UK consumers and businesses. Here, after a thorough investigation, we’re satisfied that the deal would have no impact on competition in the UK.”

When the CMA examined the matter closely, it concluded that the merger does not cause competition worries. It further added that iRobot possesses a “modest” market position in the UK markets and faces multiple rivals. Hence, the loss of potential competition from Amazon would not have a substantial impact on market outcomes.

Additionally, it found out that although Amazon can take the role of a major retailer of robot vacuum cleaners in the UK, it has little incentive to do so. The CMA clarified that positioning the brand as such would have fewer benefits since the UK market for robot vacuum cleaners is small with little expected growth in the future. It also added that the decision would prove costly and have limited strategic importance.

Regarding the threat to smart home rivals, the CMA argued that in the UK, robot vacuum cleaners and the data they record are not considered to be significant inputs to the emerging “smart home” market. Lastly, the body claimed that since similar products to the iRobot exist, such a threat to smart home rivals would persist regardless of the acquisition.

While the CMA has cleared Amazon of its suspicions, it stated that the decision will remain under regulatory review in other jurisdictions.

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