Managing the Nation

"Get rich or Die tryin" is it the case with Whirlpool-Maytag ?!

Referring to the article “Regulators OK Whirlpool-Maytag merger”, Whirlpool is having a bad time trying to merge with Maytag. Knowingly Whirlpool is the number one appliance manufacture in the US, while Maytag is the third behind GE consumer products. This merger was severely opposed by antitrust regulators: group of lawyers, who started operating after the Sherman Antitrust Act (1890), which is law designed to make illegal all trusts and other combinations that aimed to create monopolies in restraint of interstate commerce. Relating this article to David Baron’s we find the following:

1. Issues: The issue was derived due to Whirlpool potential merger with Maytag an aspect that allows the firm to control of almost 70% of the clothes washers and dryers besides half of the dishwashers demanded by the US economy. Moreover this merger is expected to decrease the competition for this industry and increase oligopoly (of which I believe would occur between GE and the new merger Whirlpool-Maytag leaving other competitors all the way behind).
2. Information: The information is basically under process; more studies are made by antitrust regulators, lawyers and Justice Department. As mentioned in the case “The department asked for more time to review the merger last month, prompting wide speculation that it was preparing to challenge the deal”, while the antitrust regulators commented “The antitrust division has been reviewing the proposed merger since September. The companies announced that they had signed a definitive merger agreement in August.” And executives from both companies declined to discuss how the merger would affect factories.
3. Interests: Interests include stakeholders of both companies. It was mentioned the Whirlpool and Maytag share’s prices rose by 27.7% and 7.1% respectively. This reflects our previous discussion that shareholders are optimistic that this merger would boost profits and decrease current competition. Other interests are the antitrust regulators and the Justice Department in the U.S. We could also add consumers as an interest group but am referring to antitrust regulator and department of just as the consumer’s representatives.
4. Institutions: As was mentioned in Baron’s framework, Institutions are regulators or in other words organizations having the authority to oppose new laws. In this case we find that the main authority is the Justice Department, although it ruled against the antitrust lawyers but the case isn’t settled yet as they requested more time to review some substantive matters. Another institution that’s not involved yet but I assume it will be involved as soon as possible is the Federal Trade Commission Consumer Protection.

In conclusion, I believe that this merger won’t be opposed or in other words it shouldn’t be opposed by the Justice Department because large retailers including Sears, Lowe's Companies Inc., The Home Depot Inc. Co. and Best Buy have alternatives available to help them resist any attempt by the combined company to raise prices. Not only this, but also competitors are numerous and almost equal in size such as GE and Frigidaire besides foreign competitors such as Samsung. And due to increasing demand those competitors could sustain their production units or simply increase their production.

posted by Managing_the_Nation @ 3:17 AM