ELUXY AB Electrolux (PK)

By Brent Kendall 

WASHINGTON--A Home Depot Inc. executive testified Wednesday in favor of Electrolux AB's planned acquisition of General Electric Co.'s appliance business during occasionally contentious proceedings in a government antitrust case.

Bob Baird, a Home Depot vice president for merchandising, said the transaction would help a post-acquisition Electrolux "get more innovative" and "compete on a better level" with such other appliance makers as Whirlpool Corp., LG Electronics Inc. and Samsung Electronics Co.

The Electrolux deal makes particular sense given GE's stated interest in exiting the appliance business, Mr. Baird said. He was testifying in the Justice Department's antitrust challenge to the Electrolux-GE deal.

Electrolux called Mr. Baird to the witness stand as part of its defense against the government's allegations that the GE deal would be anticompetitive and would lead to higher prices for cooking appliances. In representing a top retailer, Mr. Baird was sought to testify about the impact on consumers by the proposed acquisition.

Mr. Baird said Home Depot tries to push back when manufacturers try to raise prices. He also said Electrolux was hemmed in by LG and Samsung, brands that he said were more popular with consumers. Electrolux must sell similar products more cheaply than its South Korean rivals to win customers, he said.

"If they have the same price, they lose," Mr. Baird added.

The Justice Department, which is asking U.S. District Judge Emmet G. Sullivan to block the transaction, fired back on multiple fronts.

Department lawyer Ethan Glass said it wasn't always the case that Home Depot sought to keep prices down for consumers, citing several internal communications between Mr. Baird and appliance makers in which the Home Depot executive appeared to encourage manufacturers to raise prices on certain models.

In one email exchange, Mr. Baird indicated he had talked Samsung into raising the price on a new range model by $100.

Mr. Baird said that example was out of the ordinary. He said he believed Samsung was mispricing the range, which could have hurt how consumers viewed the relative prices of other products.

Mr. Glass argued that Home Depot had an incentive to support the Electrolux-GE deal because it would give the company leverage to escape an agreement with GE that controlled how much floor space GE appliances receive in Home Depot stores. Mr. Baird denied that his position on the merger was related to that issue.

The Justice Department also suggested Mr. Baird himself was overly cozy with GE. Mr. Glass noted the Home Depot executive owned a substantial amount of GE stock, and he questioned a transaction in which Mr. Baird bought more shares before the Electrolux deal was formally announced.

Mr. Glass also said Mr. Baird last year gave a GE executive a heads-up that Home Depot's shares were poised to have "a good day" the following day when the company was due to announce earnings.

Under questioning from Electrolux's lawyer, Mr. Baird said he had no advance inside knowledge about the Electrolux-GE deal. He also said his comment to the GE executive about Home Depot's coming good fortune came after the stock market had closed, with the company announcing its earnings before the market reopened the next day.

The Justice Department filed suit in July to block the Electrolux-GE deal. The trial began last month and is expected to run into next week, with Judge Sullivan's decision expected early next year.

Write to Brent Kendall at brent.kendall@wsj.com

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(END) Dow Jones Newswires

December 02, 2015 18:14 ET (23:14 GMT)

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