On 14 December 2017 the CMA announced that it has fined two suppliers of specialist healthcare and manufacturing 'cleanroom' laundry services for breaking competition law by agreeing not to compete for each other’s customers in Great Britain.
The CMA found that both businesses had provided cleanroom services under the 'Micronclean' brand since the 1980s in a longstanding joint venture agreement. The decision concerns the period between May 2012 (when the companies entered into new, reciprocal trademark licence arrangements) and February 2016 (when the trademark licences were terminated, and the related joint venture was disbanded). The CMA opened its investigation on 30 March 2016.
The CMA found that under the trademark licence arrangements, one party served customers in an area north of a line broadly drawn between London and Anglesey, and the other party served customers south of that line, and each agreed not to compete against the other. Market sharing arrangements are generally illegal under competition law unless it can be shown that they are necessary or justified. The CMA concluded that the 2012 commercial arrangements were not.
There are a number of practical points arising from this decision, including the following:
- First, it is essential that parties undertake periodic reviews of trading arrangements, especially long-running joint ventures and collaborative agreements, as their compliance with competition law may change over time. In this case, although the CMA's press release makes it clear that joint venture arrangements had been in place since the 1980s, the CMA focused only on the new commercial arrangements put in place in 2012, noting that the decision to enter into new arrangements at that time was "an opportunity for the businesses to consider the competition law implications of their commercial arrangements". There was no finding of infringement in the period prior to 2012.
- Second, the CMA notes that the case came to its attention in the context of two related merger reviews. This is a good example of the ongoing communication between the CMA's mergers branch and its enforcement unit, and is also a reminder that information provided to competition regulators in the context of scrutiny of a merger under her Enterprise Act 2002 can trigger subsequent action under the Competition Act 1998.
- Third, the CMA pursued the case even though the arrangements had been terminated before the CMA opened its investigation, illustrating that in addition to bringing infringing conduct to an end, the CMA is concerned to promote deterrence by taking a robust approach to enforcement in respect of historic conduct.
- Finally, the total fines imposed at the end of the investigation were £1.7 million, which is at the low end of the range of fines imposed by the CMA. This is consistent with the CMA's stated aim of managing a portfolio of enforcement action focused on both larger and smaller cases, and re-enforces the message that companies of all sizes must ensure they comply with competition law.
Ashurst acted on this case, with Duncan Liddell (Partner), Alexi Dimitriou (Senior Associate), Tom Cooling (Senior Associate) and Laura Carter (Associate) advising Berendsen following commencement of the CMA investigation on 30 March 2016.
