Dive Brief:
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The U.S. Department of Justice is trying to stop General Electric Co. from selling its appliance business to Electrolux AB, saying the consolidation would narrow competition in the industry and raise prices on refrigerators, ranges and dishwashers.
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Homebuilders told The Wall Street Journal, however, that they do not buy enough appliances from Electrolux to consider it a major player, so its acquisition of GE Appliances "does very little to affect overall competition," according to Bill Justus, vice president of supply chain for David Weekley Homes. The newspaper also quoted the co-CEO of Denver-based builder Century Communities, who called the deal "somewhat of a nonissue."
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Still, the Justice Department said whittling the number of major competitors in the $4 billion home appliance market from three to two would lead to higher prices for commercial customers like homebuilders and the government, and eventually for retail customers like homeowners who buy directly from stores.
Dive Insight:
GE ranks second among sellers of cooking appliances in the U.S. with 28% of market share, The Journal reported. Whirlpool is the largest, and Electrolux is a distant third. Combined, the three make 90% of such sales each year.
An industry with three or more competitors is substantially more competitive than one with two or none, an University of Michigan antitrust expert told The Journal. "With only two dominant competitors, companies are less likely to aggressively battle on pricing, leaving customers with few options," Erik Gordon told the newspaper.
A spokeswoman for Toll Brothers told The Journal she agreed: "Competition always benefits the consumer," she said. "Consolidation limits competition."