£1.71m Fine For Laundry Companies Found To Be Market Sharing
The CMA has fined 2 suppliers of ‘cleanroom’ laundry services for breaking competition law by agreeing not to compete for each other’s customers
It follows enforcement action by the Competition and Markets Authority (CMA) against the companies known today as ‘Micronclean Limited’ and ‘Berendsen Cleanroom Services Limited’.
The specialist laundry services they supply include the cleaning of garments worn by people working in ‘cleanrooms’. These are highly sanitised environments used by businesses such as pharmaceutical and medical device manufacturers as well as NHS pharmacies.
Both businesses had been trading under the ‘Micronclean’ brand since the 1980s in a longstanding joint venture agreement. In May 2012 the companies entered into new, reciprocal trademark licence arrangements under which they agreed not to compete against each other.
Under the agreement, Micronclean Limited served customers in an area north of a line drawn broadly between London and Anglesey, and Berendsen Cleanroom Services Limited served customers located south of that line. The companies also agreed not to compete for certain other customers, irrespective of their location.
Market-sharing arrangements like these are generally illegal under competition law. For customers, these arrangements prevented them from shopping around to get a better deal and that can lead to higher prices, less choice and less innovation in the market.
In reaching its decision, the CMA considered whether the wider joint venture between the companies, including any benefits which flowed from it, meant that these market-sharing arrangements were necessary or justified. The CMA concluded that they were not.
Ann Pope, CMA Senior Director for Antitrust Enforcement, said:
Market-sharing agreements are well established and serious breaches of competition law.
Organisations like the NHS rely on the cleanroom laundry services provided by these companies, but we have found the 2 biggest players were dividing customers between them, leaving those customers with very little choice in service provider.
Companies must regularly check their trading arrangements, including long-running joint ventures and collaborative agreements, to make sure they’re not breaking the law. The entry into new trade mark licence agreements in 2012 was an opportunity for the businesses to consider the competition law implications of their commercial arrangements.