March 29 (Bloomberg) -- Whirlpool Corp. can complete its $1.68 billion takeover of Maytag Corp., the U.S. Justice Department decided as it rejected concerns from its own lawyers that the combination might hurt competition.

The acquisition, approved without any required divestitures, will create the world's largest appliance maker, accounting for 70 percent of U.S. sales. Thomas O. Barnett, in his first merger decision since being confirmed as the Bush administration's antitrust chief, said ``competitive dynamics'' will deny the new company power to raise prices.

``I'm stunned,'' said Mirko Mikelic, a senior portfolio analyst with Fifth Third Bank in Grand Rapids, Michigan, with $21 billion assets including Whirlpool bonds. ``I thought they would need to do at least something to appease the Justice Department.''

Shares of Maytag surged $4.73, or almost 28 percent, to $21.81 at 4 p.m. in composite trading on the New York Stock Exchange. Whirlpool rose $6.38, or 7.1 percent, to $95.95.

Whirlpool Chief Executive Officer Jeff Fettig said he expects to complete the deal by April 3 and conceded he felt some nervousness about winning over the Justice Department. For Whirlpool, it means acquiring such Maytag brands as Hoover, Jenn- Air and Magic Chef.

``Until you get the final approval, there's certainly some anxiety,'' Fettig said. ``I wouldn't confuse that with lack of confidence.''

Protecting Competition

Government lawyers who investigated the deal had raised concerns it would lead to higher prices for washing machines because of the dominance in the U.S. of Whirlpool and Maytag, said lawyers familiar with the matter who spoke earlier this month on condition of anonymity because they weren't authorized to discuss the transaction.

Barnett told reporters in Washington today that cost savings from the combination and increased competition from foreign manufacturers ``rebutted that presumption'' that a company with 70 percent of the U.S. market could stifle competition.

``We felt it was justified to conduct a very extensive and thorough investigation in this case,'' Barnett said. ``We also went beyond the market shares and evaluated the competitive dynamics as to what was likely to happen as we moved forward in this market.''

Whirlpool argued that growing foreign competition from makers such as China-based Haier Group Corp., LG Corp. of South Korea and Sweden's Electrolux AB would constrain its ability to raise prices.

GE and Electrolux

The Justice Department said in a statement that it is convinced the combined company can't raise prices because of competition from General Electric Co. and Electrolux AB's Frigidaire line. It also cited foreign-made products sold by such companies as LG and Samsung Electronics Co. Ltd. that ``have quickly established themselves in recent years.''

The Justice Department also cited competition from Sears Holdings Corp.'s Kenmore brand, which is manufactured by Whirlpool.

Whirlpool said its production of the Kenmore brand shouldn't be counted as part of its share of the washing machine market because Sears sets prices and promotes its own appliances.

Whirlpool, based in Benton Harbor, Michigan, outbid Ripplewood Holdings last year for Maytag, which reported a fourth-quarter loss of $75 million, or 93 cents a share. Maytag's loss widened from $14.1 million, or 18 cents a share, in the same quarter a year earlier.

Preliminary Bid

Haier withdrew its preliminary bid of $16 a share for Newton, Iowa-based Maytag after Whirlpool bid $17. Whirlpool then raised its offer three times to $21 a share before Maytag's board agreed to the deal.

Today's share price for Maytag rose above $21 as investors who had been worried the deal would be blocked rushed to cover their short positions. The Justice Department could have gone to federal court to seek an order barring completion of the purchase.

U.S. manufacturers have ``excess capacity'' and would be able to increase production, the Justice Department said in its statement. Large retailers that account for most appliance sales -- Sears, The Home Depot Inc., Lowe's Cos. Inc. and Best Buy Co. -- have alternative suppliers to help them ``resist an attempt by the merged entity to raise prices,'' the department said.

Barnett said there is increasing competition between top- loading washers made by Whirlpool and Maytag from front-loading models designed to save energy. As the price of foreign-made front-loaders continues to drop, competition will only increase, he said.

To contact the reporter on this story: James Rowley at jarowley@bloomberg.net

Last Updated: March 29, 2006 18:24 EST