Court testimony by GE Appliances CEO Chip Blankenship bolstered federal regulators’ argument that the unit’s acquisition by AB Electrolux would reduce competition, a source familiar with the government’s case told Insider Louisville.


The U.S. Department of Justice has sued to block Sweden-based Electrolux from buying General Electric’s Louisville-based appliance business for $3.3 billion. The feds contend that the merger would lead to higher prices for consumers. The companies have said regulators do not have a complete understanding of the market, which, they say, is seeing increasing competition.

In court proceedings this week in Washington, D.C., Blankenship testified under redirect that if the merger were allowed to proceed, Electrolux and Whirlpool would control 98 percent of ranges priced below $600, the source familiar with the government’s case told Insider Louisville.

That bolstered the DoJ’s argument that the merger would harm lower income consumers, the source said.


Chip Blankenship

The government has shown that beyond Electrolux, GE and Whirlpool, few companies have a presence in the United States, the source said.

Ethan Glass, an attorney with the DoJ’s antitrust division, said at the beginning of the trial that Electrolux and GE essentially are asking the court to take the gamble that small players, startups and eventual entrants into the North American market will create enough competition to keep prices low for consumers, the source said.

“That’s a big gamble,” he said.

A different take


Another person familiar with the case told Insider Louisville that testimony from Blankenship and an Electrolux executive reinforced the strong competition that the appliance market is seeing.

The DoJ made its case, she said, if one accepts the premise that the industry lacks robust competition – but that is not the reality.

For example, the source said, the American appliances industry in the last 10 years has seen the combined market share of Samsung and LG go from nothing to 25 percent.

Both Blankenship and Electrolux CEO Keith McLoughlin made clear in their testimony that competition in the industry is robust and increasing, the source said.

Keith McLoughlin

Keith McLoughlin

And they said retailers such as Lowe’s and Best Buy hold significant sway over manufacturers, the source said. The merged company would not be able to simply raise its prices, because retailers could easily threaten to move the company’s products off the showroom floors.

The DoJ is looking at some issues in isolation but is ignoring how the industry really works, the source said.

What’s next?

Electrolux had made an offer to try to convince the DoJ to drop its objections, but the feds rejected the offer Oct. 30 as far from adequate.

Both sources said today that both sides remain open to a settlement.

On Monday, the DoJ is scheduled to call Michael Whinston, an economics professor at the Massachusetts Institute of Technology. After Whinston’s testimony, which may continue Tuesday, the government will rest its case, the source familiar with the government’s case told IL.

The other source familiar with the case said Electrolux will counter the DoJ’s expert with Jonathan Orszag, an executive of economic consulting firm Compass Lexecon. Orszag will testify that after Whirlpool acquired Maytag, the appliance industry became more competitive.

Proceedings are expected to close in early December, but the sources said that it is undetermined when the judge will issue a ruling.