GE, Electrolux to fight U.S. antitrust lawsuit

The U.S. Department of Justice filed an antitrust lawsuit Wednesday to block Swedish-owned Electrolux from its $3.3 billion proposed purchase of General Electric's Louisville-based appliance business.

The suit argues the move could lead to price increases as the combined company dominates sales of kitchen appliances to customers like home builders, property managers, hotels and governments.

But both companies disputed the government's conclusions, saying they would defend the sale in court but also continue talks in hopes of reaching a settlement.

"Electrolux and GE intend to vigorously defend the proposed acquisition as pro-competitive and pro-consumer. Our goal remains to close the deal this year," GE said in a statement. "GE continues to believe that GE Appliances' customers, consumers and employees will benefit from Electrolux's commitment to the appliance business and its ability to compete with global competitors."

Kim Freeman, a spokeswoman for the GE Appliance Park in Louisville, said the suit would not have immediate implications for the Louisville plant or its workers, whose union representing about 3,800 at the Louisville site on Tuesday overwhelmingly approved a four-year contract.

She said the company will press ahead with nearly $250 million in ongoing investments at the site.

Dana Crittendon, president of the local IUE-CWA, said that — despite the uncertainty — he isn't overly concerned which corporate entity controls the park so long as wages remain strong.

Companies can try to reach a settlement even after a lawsuit, as American Airlines and US Airways did when the department sued to bar their merger in 2013.

Antitrust lawyers for Electrolux said in a conference call that discussions with the government had been going on for some time. They disagreed with government figures and its predictions about the sale's market implications.

That included disputing the DOJ's contention that GE, Electrolux and Whirlpool control 90 percent of domestic sales of major cooking appliances. They said market shares of LG, Samsung and others "have grown dramatically."

After the suit was announced, Electrolux, in a statement, said that it "does not agree with the DOJ's assessment that the acquisition will harm competition" and said that they found the "DOJ's opposition to be wholly inconsistent with its 2006 decision to approve Whirlpool's acquisition of Maytag — at the time one of Whirlpool's major competitors on the U.S. home appliance market."

"The appliances industry is more competitive than ever," said Keith McLoughlin, President and CEO of Electrolux, said in a statement.

But in its suit that asks a U.S. District Court in Washington, D.C. to block the sale, the Justice Department said the deal would be bad news for buyers of major cooking appliances, but it is most concerned about "contract channel" sales, where suppliers sell to homebuilders, to the builders and managers of apartment buildings and condominiums, hotels and motels; and to governments.

It said Electrolux has made major efforts to win more contract channel business over the last decade, but is now seeking to acquire GE's business instead of competing with it.

Electrolux agreed in September to acquire GE's century-old appliances unit, a purchase that would put the Swedish company on par with industry leader Whirlpool Corp. in the U.S., Bloomberg reported. The sale would add GE appliances, with brands such as Hotpoint, to an Electrolux lineup that includes AEG stoves and Frigidaire refrigerators.

According to 2013 data from research firm IBISWorld, completing the sale would give Electrolux control of about 40 percent of the U.S. appliance market. Electrolux and Whirlpool together would have more than three-quarters of sales, the data show.

Attorneys for the Swedish appliance maker said they believed there was still enough time in 2015 to close the deal.

Electrolux has said it's seeking new leadership for its North American appliance business, which is currently overseen by Chief Executive Officer Keith McLoughlin.

GE's appliance divestiture is part of Chief Executive Officer Jeffrey Immelt's push to refocus on manufacturing units making industrial products such as gas turbines and jet engines. GE is also selling off about $200 billion of assets from the GE Capital unit that imperiled the company during the 2008 financial crisis.

Reporter Chris Kenning can be reached at (502) 582-4697. Follow him on Twitter at @ckenning_cj.

The Associated Press and Bloomberg News contributed to this report.