UPDATE: Whirlpool Petitions US For Trade Probe Of Samsung, LG

Whirlpool Corp. (WHR) is accusing South Korean rivals Samsung Electronics Co. (SSNHY, 005930.SE) and LG Electronics Inc. (066570.SE) of violating trade laws in their marketing of foreign-built refrigerators in the U.S.

Whirlpool, the world's largest manufacturer of household appliances, has asked the U.S. Commerce Department to investigate the two companies, which have been grabbing market share from Whirlpool and Electrolux AB (ELUXY, ELUX-B.SK) by offering lower prices on appliances. Whirlpool alleges that the companies are "dumping" refrigerators in the U.S. from South Korea and Mexico, a practice that involves selling appliances in the U.S. for much less than their cost in the overseas markets where they were manufactured.

"Dumping is an unfair trade practice used to drive out competitors, which means consumers end up with fewer choices," said Marc Bitzer, Whirlpool's president for North American operations, in a written statement.

Whirlpool's complaint specifically cites Samsung and LG's discounting of high-end refrigerators featuring a pull-out freezer drawer on the bottom of the box. Bottom-mounted refrigerators are about $3 billion a year business in North America. Whirlpool's market share in the category was about 35% in 2008, but had fallen to below 15% in 2010. Meanwhile, imported bottom-mounted boxes, led by Samsung and LG, accounted for 84% of the North American market last year, according to Whirlpool's filing. Neither Samsung nor LG had any presence in the category a decade ago, said Sam Darkatsh, an analyst for Raymond James.

Whirlpool, which is based in Benton Harbor, Mich., alleges Samsung and LG also have received "substantial unfair subsidies" from the South Korean government that allow the companies to offer big discounts in the U.S. and maintain an advantage over other appliance makers. Whirlpool wants the U.S. government to assign a duty on the companies' imported appliances.

"The fact that this petition has come about should not be a shocker," Darkatsh said. "There's been a lot of industry chatter about the fact that the Koreans are not focused on profitability let alone return on capital. They're trying to buy market share."

Samsung and LG did not immediately respond to requests for comments on the complaint.

Samsung has said it's targeting world-wide appliance sales of about $30 billion a year by 2015, up from more than $10 billion last year.

Aggressive discounting during the U.S. Christmas shopping season put pressure on Whirlpool's fourth-quarter profits at a time when the company is facing rising costs for materials, such as steel and copper. Whirlpool and Electrolux have said they plan to raise U.S. appliance prices by between 8% and 10% in April.

"It will be interesting to see how sticky those price increases will be," Darkatsh said. "Pricing has been very soft and very promotional since the end of 2009 because the demand hasn't been there."

Whirlpool's stock was recently trading up 2.3% at $83.44 a share.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; [e-mail]

--Nathan Becker contributed to this article.