Trial opens in Justice Department bid to force Assa Abloy to scrap deal

WASHINGTON (Reuters) - Lawyers for the U.S. Justice Department and Assa Abloy, the world's biggest lockmaker, began arguments Monday in a fight over whether the Swedish company can go forward with a $4.3-billion deal to buy a division of Wisconsin-based Spectrum Brands Holdings Inc that makes residential door locks.

Speaking for the government, Matthew Huppert said that Assa Abloy's plans to resolve antitrust concerns by selling some assets, including its Yale smart lock U.S. business, was "insufficient" and "cobbled together to rescue an illegal merger." The government has asked the judge to stop the deal.

Speaking for Assa Abloy, Justin Bernick said that Fortune Brands, which is purchasing the Emtek and Yale businesses, is a strong buyer that will have the patents, software, access to supply chains, staff and other assets needed to compete, ensuring that consumers would not be hurt by the transaction. It had announced in December that it would sell the assets for $800 million.

Bernick also argued that internet sales meant that a lot of small competitors had entered the market, also reducing the possibility that consumers would be hurt by the merger.

The lawsuit to stop the deal, which was filed in September, is one of a several high-profile fights that the government has undertaken to stop transactions that the Biden administration believes would hurt consumers. All but one has ended in defeat for the Justice Department.

Judge Ana Reyes, who is hearing the case, is expected to make a decision on or before June 20.

The government has said that the deal would give Assa Abloy a near-monopoly in top-line mechanical door hardware and more than half of the fast-growing market for smart locks, devices that allow homeowners to enter their homes electronically.

The company, whose products range from security doors and automated entrance solutions to electronic and mechanical locks, has in recent quarters cut costs as slowing demand, supply chain problems and semiconductor shortages have hampered its business.

Assa Abloy makes Yale, August and Emtek brands, while Spectrum's division makes the Baldwin and Kwikset brands. Assa's rivals include Allegion and Stanley Black & Decker.

(Reporting by Diane Bartz; Editing by Aurora Ellis)