The Canadian Competition Bureau recently released a Technical Backgrounder explaining the reasoning behind its mid-March 2006 clearance of the acquisition of Maytag by Whirlpool. Both parties are manufacturers of household appliances. For the purposes of competitive review, the product market was defined as the five major home appliances: washers and dryers (the "laundry" segment), refrigerators, dishwashers and ranges. Although both Maytag Canada and Whirlpool Canada were viewed as industry leaders, especially in the laundry segment, and post-merger shares in this segment were significant, the Bureau held that effective competition would remain after the acquisition.
In assessing the proposed merger, the Bureau decided that appliances manufactured by Whirlpool or Maytag and sold under a retailer’s house brand should not be attributed to the merged entity, but should rather be treated as an independent competitor in the marketplace. In coming to this decision, the Bureau considered that the retailer owns and controls the house brand and makes all decisions regarding pricing and marketing; that the retailer is often responsible for its own warehousing and distribution, and provides its own product warranties and servicing for its house brands; that there are several remaining manufacturers available to compete for house-brand supply contracts; and that retailers can and do switch from one appliance manufacturer to another, if no long-term manufacturing contract is in place.
In effect, this decision recognizes the changing roles of large retailers, which can function simultaneously as distributors for and competitors to the OEMs.
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