University laundry merger broken up by CMA

11 October 2018

UK
The Competition and Markets Authority (CMA) has decided that JLA must sell Washstation to preserve competition in the supply of managed laundry services to higher education providers.

The decision by the CMA comes following an in-depth investigation into market leader JLA’s takeover in May 2017 of its closest competitor Washstation. The two firms supply managed laundry services to higher education providers including universities, colleges and student accommodation.

The merger was investigated by a CMA group of independent panel members, which published its final decision on 11 October. The group found a substantial loss of competition resulting from the merger and that customers may be expected to pay more for, or receive lower quality, managed laundry services.

Findings show that other firms offering laundry services to higher education providers are not currently able to compete effectively with JLA/Washstation. The investigation also found that any future growth by these smaller rivals would be unlikely to offset the loss of competition resulting from the merger, either sufficiently or quickly enough.

Additionally, it was found that companies providing laundry services in other sectors, such as healthcare or leisure, would find it difficult to enter the higher education sector and compete effectively against JLA/Washstation in the foreseeable future.

In order to address the loss of competition resulting from the merger, the CMA has decided that JLA must sell Washstation’s higher education business to a new owner to be approved by the CMA.

Stuart McIntosh, inquiry chair, said: “Our decision will preserve competition and choice for universities and other providers of student accommodation.

“The CMA thoroughly monitors mergers across the UK. Where it finds concerns it will take action, and has the ability to reverse completed mergers to ensure that customers are not worse off.”

Full information on the merger investigation can be found on the case page <https://www.gov.uk/cma-cases/vanilla-group-washstation-merger-inquiry>



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