Tie-up between Hotpoint and Beko set for full-scale competition probe

Britain’s competition watchdog is launching a full-scale investigation into a planned tie-up between the electrical and white goods giants behind Hotpoint and Beko in Europe amid worries the deal could reduce choice and increase prices.

The Competition and Markets Authority (CMA) said it would refer Turkish firm Arcelik’s takeover of Whirlpool’s European domestic appliances business for a so-called phase two investigation after both firms failed to offer moves to address its concerns.

The regulator said last month that the deal could lead to less competition in the supply of major household appliances in the UK.

The merged company would be the biggest supplier of washing machines, tumble dryers, dishwashers and cooking appliances in the UK, a market worth more than £3.8 billion, according to the CMA.

Whirlpool makes household appliances, including the Hotpoint and Indesit brands, while Arcelik supplies home appliances and consumer electronics, such as the Beko and Grundig brands.

The CMA said last month that Arcelik and Whirlpool’s position is “particularly strong in the low to mid-range price categories of these domestic appliances, where they would face competition from only a small number of competitors.”

After the initial probe, the CMA’s director of mergers, Sorcha O’Carroll, warned that the tie-up “could reduce the choice of suppliers available to retailers and ultimately to shoppers”.

“As competition from other suppliers in the low-mid price range appears to be limited, we are concerned that this tie-up could leave people paying more or receiving lower quality products,” she added last month.

On announcing plans for a more in-depth probe, the CMA said the two companies had informed the regulator that they would not be making any moves to address these initial concerns by the October 5 deadline.

The deal was announced in January, with plans for a new company to be formed, made up of Arcelik and Whirlpool’s European domestic appliances businesses.

Under the deal, Arcelik would own 75% of the combined company and Whirlpool the remaining 25%.

The EU competition watchdog is also reviewing the deal and is set to reach a decision by October 23.