updated 3/29/2006 6:34:33 PM ET 2006-03-29T23:34:33

Antitrust regulators on Wednesday approved Whirlpool Corp.’s proposed $1.79 billion purchase of Maytag Corp., saying the merger would not reduce competition substantially.

The existence of strong rivals and the cost savings the new company would generate indicate “this transaction is not likely to harm consumer welfare,” the Justice Department said.

Whirlpool CEO Jeff Fettig said the companies expect to close the deal by Monday.

An investigation by the department’s Antitrust Division found that an effort by the new company to raise prices on its washers and dryers “likely would be unsuccessful” because at least five other companies are well-established in U.S. markets.

Those competitors include the Sears Holding Corp.’s brand Kenmore, General Electric Co. and Frigidaire, which is made by Electrolux AB. The Justice Department also concluded that foreign manufacturers have quickly established themselves in recent years.

“LG, Samsung and other foreign manufacturers could increase their imports to the U.S.,” the department said in a statement. “Existing U.S. manufacturers have excess capacity and could increase their production.”

The Justice Department said large retailers including Sears, Lowe’s Companies Inc. , The Home Depot Inc. Co. and Best Buy have alternatives available to help them resist any attempt by the combined company to raise prices.

The cost savings and other efficiencies gained by the merger should also benefit consumers, the department said in a statement.

Some analysts and antitrust lawyers had expected the Justice Department to object to the deal. The merger would create a company producing half of the dishwashers in the United States and more than 70 percent of the clothes washers and dryers.

Such a rise in market concentration has typically drawn a challenge from the government.

Assistant Attorney General Thomas O. Barnett said the combined market share prompted a lengthy investigation by his staff.

“It’s fair to say that Maytag and Whirlpool account for a large share of the laundry products sold in the United States today and that relatively large share creates an initial rebuttable presumption that justifies an extensive look,” he said.

However, he said the investigation resolved those concerns.

The department asked for more time to review the merger last month, prompting wide speculation that it was preparing to challenge the deal.

He declined to comment on whether his staff had recommended a challenge, saying he doesn’t comment on internal deliberations.

Whirlpool, based in Benton Harbor, Mich., is the largest appliance manufacturer in the United States.

Maytag, based in Newton, Iowa, is number three, behind GE Consumer products.

Executives from both companies declined to discuss how the merger would affect factories and the Maytag’s corporate headquarters in Newton, Iowa

“The combination of Whirlpool and Maytag will create substantial benefits for consumers, trade customers and shareholders, through continued development of innovative products, improved quality and service, and cost efficiencies,” Fettig said.

Maytag CEO Ralph Hake said the deal provides fair value to Maytag shareholders and will help the company reach a broader base of customers by expanding its global reach.

David MacGregor, an industry analyst with Ohio-based Longbow Research, said the deal is likely to rapidly improve Maytag’s falling market share.

“There’s going to be stronger management, there’s going to be more resources for growing the business, the brands will have product development that they haven’t had in the past and there will be a lot of advertising and promotional support that the brands have lacked in the past,” he said.

The antitrust division has been reviewing the proposed merger since September. The companies announced that they had signed a definitive merger agreement in August.

Whirlpool offered to pay $21 a share for Maytag. Including the assumption of $977 million of Maytag debt, the entire deal is valued at about $2.7 billion.

Whirlpool won a bidding match last summer that included a $14 per share bid by New York investment firm Ripplewood Holdings and investment partners. China’s Haier America, backed by Bain Capital and Blackstone Group had bid $16 per share to acquire Maytag, whose brands include Maytag, Amana, Hoover, Jenn-Air and Magic Chef.

Whirlpool, which makes KitchenAid, Brastemp, Consul and other brands racheted up the bidding from its initial $17 offer to $21 to entice Maytag away from the Ripplewood group.

Maytag shares rose $4.73, or 27.7 percent, to close at $21.81 on the New York Stock Exchange. They have traded in a 52-week range of $9.21 to $19.97.

Whirlpool shares gained $6.38, or 7.1 percent, to close at $95.95. They’ve traded between $60.78 and $91.92 in the past year.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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