Business

Amazon and iRobot merger abandoned over competition concerns

Plans by Amazon and vacuum cleaner maker iRobot to merge have been abandoned following concerns that the move would harm competition.

The $1.4bn (£1.1bn) deal, which was first announced in August 2022, had previously been approved by UK regulators.

But in November the European Commission expressed concerns the online retailer might give iRobot’s products preferential treatment on its website – ahead of rival vacuum companies – if the merger went ahead.

Amazon confirmed on Monday that the deal had now collapsed after it failed to find a way forward with EU officials during talks.

The merger had also been facing scrutiny from regulators in the US. A source told Reuters news agency following Monday’s announcement that the Federal Trade Commission had been “poised” to reject the deal.

Amazon’s senior vice president David Zapolsky said: “We’re disappointed that Amazon’s acquisition of iRobot could not proceed.

“We’re believers in the future of consumer robotics in the home and have always been fans of iRobot’s products.”

He added: “This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable.”

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Amazon, which already owns “smart” products such as Alexa and Ring, had been looking to expand its range of home tech devices.

The collapse of the deal is a major setback for iRobot, which is best known for its Roomba range of circular vacuum cleaners.

It announced a restructuring plan to reduce costs, including 350 job cuts, while the firm’s founder Colin Angle also said he was stepping down as its chief executive.

Mr Angle said he and the board “mutually decided that iRobot will be better served by a new leader with turnaround experience.”

However, Amazon will still pay the firm a previously-agreed $94m (£74m) termination fee.

In its decision to approve the deal last June, the UK’s Competition and Markets Authority said the market for robot vacuum cleaners in Britain was “small,” with demand “significantly” below the levels seen in parts of mainland Europe and the US.

The regulator said that while Amazon did have the ability to harm iRobot’s rivals via its website, it did not have the incentive to do so.

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