The Australian Competition and Consumer Commission (ACCC) has rejected a behavioral undertaking offered by Google in response to the regulator’s concerns about the proposed acquisition of Fitbit.
Alphabet Inc-owned Google (GOOGL) agreed to buy fitness tracker maker Fitbit (FIT) in November 2019 for $2.1 billion. However, the ACCC has voiced concerns that the deal could be anti-competitive.
“The ACCC continues to have concerns that Google’s acquisition of Fitbit may result in Fitbit’s rivals, other than Apple, being squeezed out of the wearables market, as they are reliant on Google’s Android system and other Google services to make their devices work effectively,” ACCC Chair Rod Sims said.
Google has tried to alleviate those concerns by offering a court enforceable proposal that would regulate its behavior in certain ways towards rival competitors.
The European competition authorities have already provided conditional clearance for the acquisition to continue, but the ACCC has indicated that it will continue its investigations and consider its legal options.
“While we are aware that the European Commission recently accepted a similar undertaking from Google, we are not satisfied that a long-term behavioral undertaking of this type in such a complex and dynamic industry could be effectively monitored and enforced in Australia,” Mr. Sims said.
The ACCC will revisit the matter in March 2021. (See GOOGL stock analysis on TipRanks)
Last week, J.P. Morgan analyst Doug Anmuth reiterated his Buy rating on the stock and raised his price target from $1,870 to $2,050. This implies upside potential of around 18% from current levels.
Overall, consensus among analysts is a Strong Buy based on 27 Buys, 2 Holds and 0 Sells. The average price target of $1,935 suggests that the stock has upside potential of around 12% over the next 12 months. Google shares have gained around 30% so far this year.
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