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

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.”