Electrolux CEO tells judge appliance prices won’t rise from GE deal

Electrolux Chief Executive Officer Keith McLoughlin told a Washington judge that his company will be able to keep costs down and sell ovens and other products at lower prices should it win approval to acquire General Electric Co.’s appliance business.

McLoughlin, called to the witness stand Thursday by U.S. lawyers seeking to block the acquisition, disputed the government’s claim that customers and home builders will face higher prices if the deal proceeds.

“...Cost per unit is going to go way down,” he said. Consumers are “going to get more innovative products at lower prices.”

Electrolux has its North American headquarters in Charlotte. Lawyers for Electrolux argue the combined company and Whirlpool Corp. won’t dominate the U.S. cooking-appliance market, leading to a duopoly that would have the power to raise prices, as the U.S. argues. Whirlpool and an enlarged Electrolux would make about 88 percent of cooking ranges sold in the U.S., the government says.

McLoughlin painted a different picture, saying the market was no longer controlled by those three companies and Maytag, as it was when he started in the business. Now, manufacturers face intense competition from Samsung Electronics and LG Electronics as well as newer rivals like Haier Electronics Group, he said.

“Unless some miracle happens, this trend is going to continue,” he said.

If Electrolux, Europe’s biggest appliance maker, defeats the government’s case, the $3.3 billion acquisition will add brands like Hotpoint to lines that already include AEG stoves and Frigidaire refrigerators.

Efforts to settle out of court failed when the Justice Department last month rejected a proposal that the government said fell “well short” of replacing the competition that would be lost. Electrolux, based in Stockholm, offered to sell assets, calling its proposal a “reasonable divestiture settlement package that addressed the government’s concerns.”

The CEO said in court that prices are set not merely by the extent of market consolidation but also by raw material costs and cost pressure from suppliers and retailers.

“We’re in the worst part of the value chain,” he said. “We’re in the wrong spot to have pricing power. We don’t have it.”

Electrolux employs about 900 people at its operation on David Taylor Drive in Charlotte's University City area. McLoughlin has said the headquarters will remain in Charlotte after the GE deal.

This story was originally published November 19, 2015 at 2:17 PM with the headline "Electrolux CEO tells judge appliance prices won’t rise from GE deal."