amazon irobot acqusition UK cma

The UK’s Competition and Markets Authority (CMA) is scrutinizing Amazon’s (NYSE: AMZN) acquisition of iRobot over antitrust issues. The deal, which was announced last year, is also being scrutinized by US regulators.

Amazon was on an acquisition spree last year and announced the acquisition of iRobot which makes Roomba vacuums for $1.7 billion. It also announced the acquisition of One Medical for $3.9 billion – the biggest deal under Andy Jassy who took over as the CEO in 2021.

Amazon was also rumored to buy Electronics Arts and Signify in 2022 while recently some speculated that the e-commerce giant would buy meme stock darling AMC Entertainment.

Coming back to the iRobot acquisition, the CMA said that it is investigating if Amazon’s acquisition of iRobot would result “in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”

It added, “To assist it with this assessment, the CMA invites comments on the transaction from any interested party.”

Regulatory scrutiny in the UK adds to Amazon’s woes as the Federal Trade Commission in the US is already investigating the deal.

In February, the Financial Times reported that the EU’s competition watchdog is also considering launching a probe into the transaction.

CMA to Investigate Amazon’s iRobot Acquisition Over Competition Concerns

Commenting on the UK scrutinizing its iRobot acquisition, Amazon said that the deal would benefit customers.

Amazon added, “We’re working cooperatively with the relevant regulators in their review of the merger.”

iRobot meanwhile said that it “continues to work cooperatively with both the U.S. FTC and other regulatory agencies in their review of the Amazon-iRobot merger.”

Both Amazon and iRobot stocks are trading marginally lower today after the announcement. The price action is in line with the wider markets – major indices including the S&P 500 are slightly lower in early price action after the jobless claims came in higher than expected.

Previously, the March private payroll data also came in lower than expected – while the total job openings dipped below 10 million for the first time in two years.

Markets are now concerned that the US economy is headed for a recession, partially because of the Fed’s rate hikes.

The US central bank meanwhile has few options as the CPI inflation came in at 6% in February – thrice the inflation levels that the Fed targets.

AMZN Stock Underperformed in 2021 and 2022

Coming back to AMZN, the stock fell around 50% in 2022 and underperformed the Nasdaq which lost around a third of its value.

Even in 2021, the e-commerce giant was up only about 2% while the wider US markets rose in strong double digits.

Many analysts see AMZN as an attractive buy and Evercore ISI and Baird recently rated it as overweight.

As for the iRobot acquisition, regulatory scrutiny is not something unusual even as of late regulators globally have turned increasingly hawkish on tech mergers on fears that they would only lead to monopolies.

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