On 20 January 2017, the UK Competition and Markets Authority (CMA) announced that it has provisionally concluded that two suppliers of cleanroom laundry services in the UK have broken competition law through a market-sharing agreement implemented as part of a joint venture. This shows that the substance of an arrangement, not what it is called or purports to be, is important. Illegal cooperation is not acceptable under competition law just because it is carried out through a “joint venture.”
Cleanroom laundry services are supplied to customers with operations in sterile environments, including pharmaceutical manufacturers, National Health Service (NHS) pharmacies and manufacturers of semiconductors, micro-electronics, medical devices and precision engineering. Such customers wear specialist garments which need to be laundered in a way that prevents particulates contaminating their working environment.
The parties had been trading in the UK under the “Micronclean” name since the 1980s, by virtue of a longstanding joint venture. The market-sharing arrangement alleged by the CMA arose from trademark licence agreements which operated from 30 May 2012 until they were terminated (when the related joint venture was disbanded) on 3 February 2016.
This therefore appears to be a case of the parties’ cooperation through a joint venture allegedly extending beyond acceptable cooperation (e.g., on “back-office” arrangements) to customer-facing elements. When a cooperative arrangement between competitors is established, competition law issues are more likely to arise if the arrangement operates close to customers.