The Berendsen (Elis)/Kings Laundry Merger: Three Into Two Won’t Go

Gorecki, Paul (2020): The Berendsen (Elis)/Kings Laundry Merger: Three Into Two Won’t Go.

Abstract

The acquisition by Berendsen Ireland Limited of Kings Laundry Limited should have been prohibited by the Competition and Consumer Protection Commission, Ireland’s competition agency. Instead the agency cleared the merger subject to the divestment of three of Berendsen’s healthcare contracts. The Commission makes a compelling case for a finding that in the outsourced supply of flat linen rental and maintenance services to healthcare customers that the three to two merger would lead to a substantial lessening of competition. The divestment of Kings Laundry healthcare operations, an appropriate remedy to restore competition, was not feasible. The divestment of three healthcare contracts does not mitigate the anticompetitive effect of the merger: for customers that are the counterparties to the three contracts, the remedy will result in decline in the number of healthcare suppliers from three pre merger to two post merger. Neither of these two providers is likely to be an especially vigorous competitor. For all other healthcare customers, although the number of healthcare suppliers remains unchanged at three - pre and post merger, the evidence suggests that the purchaser of the three contracts is unlikely to replicate Kings Laundry as a significant competitive force in healthcare. The failure to implement the remedy within the nine month window deemed appropriate by the European Commission in its Remedies Notice raises concerns that Kings Laundry as a competitive force will become, in European Commission parlance, “degraded.”

• Item Type: MPRA Paper
• Language: English
• Keywords: mergers; structural remedies; substantial lessening of competition; and, Competition Act 2002.
• Subjects: D - Microeconomics > D2 - Production and Organizations > D22 - Firm Behavior: Empirical Analysis; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D44 - Auctions; K - Law and Economics > K2 - Regulation and Business Law > K21 - Antitrust Law; L - Industrial Organization > L4 - Antitrust Issues and Policies > L41 - Monopolization ; Horizontal Anticompetitive Practices

References

Amarach Research (2019) CCPC Linen Laundry Providers. Dublin: the Commission.

Andrews, Philip, Paul K Gorecki & David McFadden (2015) Modern Irish Competition Law. Netherlands: Wolters Kluwer.

Board of European Regulators for Electronic Communications (BEREC) (2018) BEREC Report on Post-Merger Market Developments – Price Effects of Mobile Mergers in Austria, Ireland and Germany, BoR (18) 119. Latvia: BEREC. For access: berec.europa.eu › document_register › subject_matter › berec › download.

Competition Authority (2002) Notice in Respect of Guidelines for Merger Analysis. Decision No. N/02/004. Dublin: the Authority.

Competition Authority (2013) Annual Report 2012. Dublin: the Authority.

Competition and Consumer Protection Commission (CCPC) (2014) Guidelines for Merger Analysis (Merger Guidelines). Dublin: the Commission.

Competition and Consumer Protection Commission (CCPC) (2016) “M/08/009 – Kerry/Breeo Update,” Press Release, 21 April.

European Commission (EC) (2008) Commission Notice on Remedies Acceptable under Council Regulation (EC) No. 139/2004 and Under Council Regulation (EC) No 802/2004, Official Journal. 2008/C 267/01.

European Commission (EC) (2010) Guidelines on Vertical Restraints. Official Journal. 2010/C 130/01.

Gorecki, Paul K (2009) “The Kerry/Breeo Merger: Two Views of Countervailing Buyer Power – the Competition Authority and the High Court,” European Competition Journal, Vol 5, No 2, pp. 585-612.

Gorecki, Paul K (2019) “Cartel Enforcement in Ireland Post the Court of Appeal’s bid-rigging Judgment: A Bleak Future?” European Competition Law Review, Vol 40 No 7, pp. 299-305.

Gorecki, Paul K (forthcoming) “The Courts and Competition Law: the Irish Experience.” Competition Law Review.

International Competition Network (2016) Merger Remedies Guide. For access: https://www.internationalcompetitionnetwork.org/wpcontent/uploads/2018/05/MWG_RemediesGuide.pdf.

Organisation for Economic Co-operation and Development (OECD) (2012) Remedies in Merger Cases. DAF/COMP (2011)13. Paris: OECD.