Digital retailer Amazon announced its intent to purchase iRobot in August 2022 and the Competition and Markets Authority (CMA) has now approved the purchase.
The latter is a robot vacuum developer and it best known for its flagship range of ‘Roomba’ products.
After the initial intent to purchase was announced, the CMA highlighted three areas of potential concern:
- whether Amazon could enter to compete as a supplier of robot vacuum cleaners if the merger did not go ahead, and whether this loss of potential competition would be substantial;
- whether Amazon could use its online store, which currently accounts for the majority of sales of robot vacuum cleaners in the UK, to disadvantage iRobot’s rivals following the merger;
- and whether iRobot vacuum cleaners could be an important input for ‘smart home’ platforms, and whether Amazon could disadvantage its rivals in this market segment through the merger.
Colin Raftery, senior director of mergers at the CMA, said: “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.”
The CMA has reached the conclusion that the deal would not lead to competition concerns in the UK. It found that iRobot’s UK market position in the supply of robot vacuum cleaners is ‘modest’ and that it already faces several significant rivals.
As a result of this, the CMA considered that the loss of potential competition from Amazon wouldn’t have a ‘substantial impact’ on market outcomes.
Another key finding of the CMA was that, though Amazon could leverage its position as a major retail to disadvantage other robot vacuum cleaner manufacturers, this outcome is unlikely. This is because Amazon does not have an incentive to do so, based on the limited benefits and high cost of this strategy for the retailer in the UK market context.
The CMA explained this further, saying that the UK market for robot vacuum cleaners is small and is not expected to grow significantly in the future.
It also confirmed that iRobot would not disadvantage Amazon’s rival ‘smart home’ platforms due to the fact that robot vacuum cleaners, and the data they collect, are generally not considered to be a major player in the UK’s burgeoning ‘smart home’ market sector.
In addition to this, the competition regulator also found that, regardless of Amazon’s position, there are several alternative robot vacuum cleaners with similar capabilities to iRobot that could represent rival ‘smart home’ offerings.