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Electrolux, GE Merger Fight May Turn On Customer Testimony

November 06, 2015

​Fenwick & West intellectual property partner Mark Ostrau, chair of the firm's antitrust and unfair competition group, was quoted in a Law360 article on the Department of Justice's challenge to the proposed acquisition of General Electric Co.'s appliance unit by AB Electrolux. The government claims the deal would diminish competition in the U.S. market for ovens and cooktops and lead to higher prices.

As the article details, both sides in the litigation are going all out to provide testimony from customers to bolster their arguments – including testimony from executives at other appliance manufacturers as well as box store chains that buy these products.

"One very interesting thing will be how much reliance is placed on customer testimony, which has had a bumpy ride over the last several years. Courts seem to discount customer testimony positively or negatively," Ostrau told Law360. "It's interesting here because they do have fairly sophisticated customers in this [contract] channel, so how to the court accepts the testimony will be pretty instructive," he added.

Ostrau noted that past experience shows that "[w]hen customers don't like a deal, courts often say, 'Well, it's not because of competitive effects, it's for other reasons.' If customers do like a deal, sometimes the court will say, 'Well, they don't know how much this might end up hurting them.'"

This particular deal could survive despite a good deal of customer testimony arguing against it, Ostrau added, if the court determines that whatever competition might be lost in the transaction can be replaced by another party.

The full article is available through the Law360 website​ (subscription required).