“Hanging out the dirty laundry” – The cleanroom laundry industry exposed?
First published by Admin on March 21, 2017 in the following categories: Investigations and tagged with cma
The cleanroom industry is being investigated by the Competition and Markets Authority (CMA) for suspected anti-competitive agreements. If true, they’ll likely be found in breach of competition laws.
Two suppliers of cleanroom laundry services and products – Micronclean Ltd (formerly Fenland Laundries Ltd); and Berendsen Cleanroom Services Ltd (formerly Micronclean (Newbury) Ltd) – are suspected of breaching competition laws by marketing and sharing products, and/or services, under the ‘Micronclean’ brand. The suppliers allegedly divided up customers by geographical ‘territory’ and/or customer type under the agreement.
The joint venture was reportedly tactically set up to allow Fenland Laundries to supply customers in an area north of a line broadly between London and Anglesey, while Micronclean Newbury supplied customers located south of the line. It’s also alleged that the agreement divided up customers based on the nature of their business or the product/service they required. The alleged agreement prevented each company from crossing the ‘line’ i.e. supplying customers which were located outside each company’s designated area and/or certain types of customers.
Investigation commenced
The investigation was opened on 31st March 2016. From March to September of the same year, the competition watchdog garnered formal and informal information from multiple parties. The CMA proceeded to analyse and review the responses from the request. From then, the watchdog decided to proceed with the investigation.
Infringement declared
After further investigation, the CMA came to a provisional finding that the market-sharing between 30th May 2012 and 3rd February 2016 amounted to an infringement of Chapter I of the Competition Act (CA) 1998. When the competition watchdog is of the view that companies have breached the Act, a Statement of Objection is issued to each company they believe to be in breach.
In the U.K., anti-competitive behaviour is strictly prohibited under Chapters I and II of the CA. The cleanroom industry has allegedly breached Chapter I of the CA. By way of a summary, Chapter I prohibits:
- Directly or indirectly fixing prices;
- Fixing trade conditions;
- Sharing markets (Fenland Laundries and Micronclean Newbury are suspected to have breached this prohibition);
- Limiting or controlling production or investment;
- Collusive tendering (bid-rigging);
- Joint purchasing or selling;
- Sharing information;
- Exchanging price information
- Exchanging non-price information;
- Restricting advertising.
The above can restrict competition in the U.K. markets. As with anything, there are exemptions which are detailed in section 9 of the Act. I’ll refrain from discussing this section as I don’t believe that it’s applicable here.
Before any solid findings are made, the CMA allows the companies to respond to allegations made in the Statement of Objections. The competition watchdog will also consider any representations.
It could be inferred that the market-sharing agreement restricted competition between the two suppliers. The competition watchdog’s Senior Director of Antitrust Enforcement, Ann Pope, reiterates the importance of competition:
“…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.”
Ms Pope contends that Fenland Laundries and Micronclean Newbury could’ve supplied all types of customers, even those outside of each other’s designated area, they just chose not to.
Both suppliers have until May 2017 now to respond to the Statement of Objections.