By: Lawson Faulkner
The European Union’s top antitrust watchdog has signaled its intention to block a merger between Amazon and iRobot, maker of the Roomba vacuum cleaner, following initial reports of an imminent approval by EU regulators. Fearing Amazon’s domination over the digital retail market, the European Commission (EC) believes the deal would discriminate against smaller robotics competitors operating on Amazon platforms.
While this announcement is hardly shocking, the EU’s attempt to straightjacket American business suggests a concerning trend for international standards of antitrust enforcement. Although limited to Europe, the EC’s influence upon progressive legal circles within the US should not be discounted. In March, reports surfaced of the FTC’s eagerness to challenge the Amazon/iRobot merger as well, highlighting growing ambivalence by leftist bureaucrats for routine vertical mergers. Left unchecked, European antitrust ideology could embolden progressive litigators to abandon the American consumer welfare standard, transforming the FTC into a proxy of the EU administrative state.
In August 2022, Amazon agreed to purchase iRobot for $1.7 billion in a bid to expand its cache of smart device offerings. This merger was sorely needed for iRobot, with annual revenue falling by 24% in 2022, for a net loss of $286 million, after profitable years in 2020 and 2021. In the third quarter of 2023 alone, U.S. revenue tumbled nearly 42%. After taking on a $200 million loan to finance operational costs, iRobot accepted a revised merger proposal from Amazon at a 15% discounted rate.
With the EC set to block the merger, iRobot appears to be on a path to inevitable demise. Loaded down by tanking share prices and unserviceable debt, EU regulators have essentially signed the death warrant of iRobot. Sadly, this outcome reflects a broader trend within the enforcement of EU antitrust law. The EC itself has been dubbed the “most extensive manifestation of a technocratic body amongst EU institutions” due to its ability to “act politically in competition law matters.” While US regulators still bear the burden of litigation, their EU counterparts can simply “approve or prohibit a transaction by taking an administrative decision.” Far too often, the EC has appointed itself judge, jury and executioner on routine mergers occurring within its jurisdiction.
Within the American antitrust community, it is imperative that these trends do not influence the minds of progressive litigators, especially those currently in power at the FTC. Nevertheless, the ideological alignment between EU regulators and FTC bureaucrats seems to be growing by the day. According to Mario Monti, former EU commissioner of competition policy, the US and the EU “see eye to eye on virtually all of the most important aspects of antitrust and merger policy.” In fact, FTC and EU authorities routinely collaborate in their enforcement of international antitrust policy, ensuring that regulators “share the same goals and pursue the same results on both sides of the Atlantic.”
If this sinister alliance were to continue, the future of US antitrust enforcement could better reflect the progressive whims of Brussels rather than the consumer-minded principles of Washington. For instance, according to a report from the American Bar Association, only 33% of merger agreements blocked by the EC were appealed, let alone overturned. Rather than submitting to a laborious litigation process, the EU’s administrative octopus can kill a merger in the womb with a snap of its tentacles. Because the EU Directorate General for Competition is an elected politician, these arbitrary rulings depend upon the transgressions of the officeholder, “whose competition policy approach may set a very different tone to the competition policy approach of his/her predecessor.” Rather than equal protection under the law, European standards for antitrust enforcement have been reduced to the self-serving interests of elected technocrats.
While startling, this low appeal rate is understandable when considering the EC’s tendency to perpetually move the goalposts of its litigation strategy. Because the consumer welfare standard does not form the bedrock of European antitrust law, EU regulators desperately lack “a coherent analytical framework.” Instead, EU regulators are given license to pursue objectives of their choosing, allowing for ideological activism to supplant legal continuity. Armed with “immense discretionary power”, the EC can handpick “the objectives that best serve its interests in each case”, dooming many mergers to a hopeless game of “heads I win, tails you lose.” If these rigged tactics appear eerily similar to the current FTC agenda, you are not alone. Without a coherent welfare standard, American antitrust principles are doomed to mimic the perpetually shifting standards of the EU.
By blocking the Amazon/iRobot merger, EU regulators have assaulted American business interests while enabling progressive US litigators to drift farther away from the US welfare standard. If this trend continues, US antitrust enforcement will cease to be anchored by objective jurisprudence. Instead, like the activist agenda of current FTC leadership, corporate prosecution will be defined by preconceived outcomes and progressive overreach. Even though the EC is an ocean away, its subversive influence could one day be felt in your own backyard.