One of the drawbacks of a global economy is that it enables regulators in less-free parts of the world to essentially export their rules and impose them on American companies. The example that brings this to mind is the deal by Amazon to acquire iRobot. The acquisition was originally announced back in August, 2022. Today Seattle-based Amazon and Bedford, Mass.-based iRobot jointly announced that the deal is off.
Amazon's general counsel, David Zapolsky, is quoted in the release as saying, "Undue and disproportionate regulatory hurdles discourage entrepreneurs, who should be able to see acquisition as one path to success, and that hurts both consumers and competition—the very things that regulators say they're trying to protect."
Zapolsky didn't specify the "undue and disproportionate regulatory hurdles" he meant, but Reuters reported that the obstacle was the European Commission, which was concerned that "the deal could restrict competition in the market for robot vacuum cleaners." Reuters said that "the regulator's main concerns were that Amazon may thwart iRobot rivals on its online marketplace, especially in France, Germany, Italy, and Spain."
In a statement, the European Commission's executive-vice president in charge of competition policy, Margrethe Vestager, argued that if Amazon bought iRobot, "Amazon would have been in a position to (i) delist or not list rival robot vacuum cleaners; (ii) reduce visibility of rival robot vacuum cleaners displayed in Amazon's marketplace; (iii) limit access to certain widgets or certain commercially attractive product labels; or (iv) raise the costs of iRobot's rivals to advertise and sell their robot vacuum cleaners on Amazon's marketplace. We also preliminarily found that Amazon would have had the incentive to foreclose iRobot's rivals because it would have been economically profitable to do so. All such foreclosure strategies could have restricted competition in the market for robot vacuum cleaners, leading to higher prices, lower quality, and less innovation for consumers."
The key word here is "would." It seems kind of speculative. Anyway, the expensive lesson here is that if you are a U.S. company trying to buy another U.S. company, don't forget to check with Brussels first.
One puzzle is why Amazon didn't just go ahead with the deal anyway, and let the EU go ahead and try to block its website from selling Roombas in France and Germany. See how the customers liked or disliked that approach by the EU. Maybe the online retailer has more regard for the rule of law than the Newton teachers union does.