Cleanroom laundry businesses alleged to have broken competition law
The CMA has provisionally concluded that 2 suppliers of cleanroom laundry services have broken competition law through a market-sharing agreement.
In its statement of objections issued to the parties today, the Competition and Markets Authority (CMA) provisionally finds that, from May 2012 to February 2016, the suppliers, which also provide certain associated products and services, had a market-sharing arrangement under which they divided up customers by geographical territory and/or customer type.
The suppliers involved, which operated a joint venture which saw them both provide services and products under the Micronclean brand, are:
- Micronclean Limited, formerly known as Fenland Laundries Limited (Fenland); and
- Berendsen Cleanroom Services Limited, formerly known as Micronclean (Newbury) Limited (Berendsen Newbury)
Cleanroom laundry services are supplied to customers with operations in sterile environments, including pharmaceutical manufacturers, NHS pharmacies and manufacturers of semi-conductors, micro-electronics, medical devices and precision engineering. Such customers wear specialist garments which need to be laundered in way that prevents particulates contaminating their working environment.
The parties had been trading under the ‘Micronclean’ name since the 1980s, by virtue of the longstanding joint venture. The market-sharing arrangement alleged by the CMA arose from trademark licence agreements which operated from 30 May 2012 until they were terminated (when the related joint venture was disbanded) on 3 February 2016.
The CMA provisionally finds that under the market-sharing arrangement, Fenland served customers in an area north of a line broadly between London and Anglesey, whilst Berendsen Newbury served customers located south of that line. Certain other customers were allegedly divided up between the parties based on the nature of their business or the product or service they required. The alleged arrangement prevented each company from supplying customers which were located outside the company’s designated area and/or certain types of customers.
The CMA provisionally concludes that the arrangement – which came to the CMA’s attention in the context of its merger control function – restricted competition between the 2 suppliers.
Ann Pope, CMA Senior Director of Antitrust Enforcement, said:
However they arise, market-sharing agreements are a serious breach of competition law, which usually deny customers the benefits that arise from competition - such as lower prices, greater choice and innovation and improved service. We allege that even though these 2 companies could have supplied all relevant types of customer, including customers outside each party’s designated area, they instead agreed not to compete.
It’s essential that companies regularly consider the competition law implications of all their commercial arrangements including when entering or buying into joint ventures. They should take full and prompt action when the risk of breaking competition law is identified.
These are provisional findings only and no conclusion can be drawn at this stage that there has been a breach of competition law. We will carefully consider any representations from the parties before deciding whether the law has been broken.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
- The Competition Act 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK. The Chapter I prohibition covers anti-competitive agreements and concerted practices between businesses which have as their object or effect the prevention, restriction or distortion of competition within the UK. Any business found to have infringed the prohibitions in the Competition Act 1998 can be fined up to 10% of its annual worldwide group turnover.
- A statement of objections gives parties notice of a proposed infringement decision under the competition law prohibitions in the Competition Act 1998. It is a provisional decision only and does not necessarily lead to an infringement decision. Parties have the opportunity to make written and oral representations on the matters set out in the statement of objections. Any such representations will be considered by the CMA before any final decision is made. The final decision is taken by a 3-member case decision group, which is separate from the case investigation team and was not involved in the decision to issue the statement of objections.
- The statement of objections is addressed to the following companies, which the CMA provisionally considers were directly involved in the alleged infringement: Micronclean Limited (formerly known, before 1 July 2016, as Fenland Laundries Limited) and Berendsen Cleanroom Services Limited (formerly known, before 15 September 2015, as Micronclean (Newbury) Limited). The statement of objections is also addressed to Berendsen plc, in its capacity as parent company of Berendsen Cleanroom Services Limited since 13 September 2014.
- The statement of objections will not be published. However, any person who wishes to comment on the CMA’s provisional findings and who is in a position materially to assist the CMA’s assessment of the case may request a non-confidential version of the statement of objections by contacting Simon Deeble (simon.deeble@cma.gsi.gov.uk) by 3 February 2017.
- The case came to the CMA’s attention in the context of two related merger reviews. The CMA investigated and cleared a merger between the joint venture vehicle then jointly owned by the suppliers, ie Micronclean Limited (since re-named, as of 1 July 2016, Fenland Laundries Limited), and Guardline Technology Limited. The CMA also investigated a proposed merger between Fenland and Fishers Cleanroom prior to the deal being abandoned.
- For more information on how to achieve compliance with competition law, see the CMA’s guidance for businesses. The CMA has also produced a series of animated videos explaining the main principles of competition law and how they affect small businesses.
- The CMA has also created a form so anyone concerned about potential anti-competitive or market issues can raise an alert.
- For more information on the CMA see our homepage or follow us on Facebook, Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on Competition Act 1998 and civil cartels cases.
- Media enquiries should be directed to Rory Taylor (rory.taylor@cma.gsi.gov.uk, 020 3738 6798).