CMA refers cleanroom laundry merger for in-depth investigation
The CMA has referred Fenland’s anticipated acquisition of Fishers’ cleanroom laundry business for a phase 2 investigation.
Last month, the Competition and Markets Authority (CMA) said that it would refer this merger for an in-depth investigation unless Fenland Laundries Limited (Fenland) offered acceptable undertakings to address the CMA’s competition concerns. The concerns relate to the supply of laundry services to the higher cleanroom laundry standard (full cleanroom) in Great Britain.
Fenland offered undertakings on 23 December 2015 to address the CMA’s competition concerns in lieu of a reference. After careful consideration, the CMA was not confident that these would resolve the concerns in a clear-cut manner (see note) and has therefore decided to refer the merger for an in-depth phase 2 investigation.
A decision on the merger at phase 2 will be made by a group of independent panel members supported by a case team of CMA staff. The deadline for the final report will be 19 June 2016.
Details of the CMA’s decision will be available on the case page shortly.
Section 73(3) of the Enterprise Act 2002 states:
…the CMA shall, in particular, have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.
In the Mergers: Guidance on the CMA’s jurisdiction and procedure, paragraph 8.3 states that:
the CMA must be confident that the competition concerns identified will be resolved by means of the UILs (undertakings in lieu) offered without the need for further investigation. UILs are therefore appropriate only where the competition concerns raised by the merger and the remedies proposed to address them are clear-cut, and those remedies are effective and capable of ready implementation.
This is further set out in Mergers – Exceptions to the duty to refer and undertakings in lieu of reference guidance (OFT1122, December 2010, adopted by the CMA as set out in Mergers: Guidance on the CMA’s jurisdiction and procedure, Annex D).