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NMa imposes fine of EUR 18 million on industrial-laundry cartel

The Netherlands Competition Authority (NMa) has imposed fines, totaling EUR 18 million, on four major laundries for engaging in market-sharing activities. These industrial laundries wash, among other items, bed linen and working-clothing for health care providers. Total annual turnover in this market is EUR 250 million.

The NMa considers proven that the industrial-laundry cartel have shared the Dutch market at least since January 1, 1998. The laundries involved were each allocated a region. They were not allowed to compete with one another outside their regions. At a later stage, they were prohibited from actively recruiting customers outside their regions. This step was the more reprehensible, given that many health care providers do not switch laundries easily. Documents reveal that the industrial laundries involved were very much aware of the fact that they restricted competition. ‘These players chose collusion over competition,’ says Chris Fonteijn, Chairman of the Board of the NMa, commenting on the fines. Mr. Fonteijn continues: ‘It is very unfortunate that these undertakings, which represent a considerable share of the market, deliberately eliminated competition. Their long-standing market-sharing agreement resulted in health care providers not being offered competitive bids from these industrial laundries, denying them the benefits of full competition.’

The laundries in question organized their collaboration as a franchise. They met several times a year, and they also discussed the market-sharing agreement outside these regular meetings. The cartel had a combined market share of 35 to 50 per cent.

The following cartel participants have been fined: Rentex Floron EUR 2,343,000, Rentex Awé EUR 2,143,000, CLF EUR 13,426,000, Rentex Dieben (participated in the cartel through April 2008) EUR 450,000.

Commitment from textile care professionals
On November 10, the NMa made available for perusal a draft decision containing the proposed commitment by the Dutch Federation for the Textile Care Industry (FTN), which is the trade association for textile care professionals in the Netherlands. In its proposed commitment, FTN states it will adjust its conduct that was aimed at eliminating the risks of competition. Practically all Dutch industrial laundries and textile rental service providers are FTN members. The FTN will remove the words “coordinating and harmonizing its members’ activities” from its statutory objective. The FTN repeals its recommendations about passing on specific costs for textile care. In addition, the FTN will no longer make any statements directed at its members that may affect their ability to independently decide on their commercial strategies. Interested parties have the opportunity to submit their opinions through December 22, 2011.

On January 1, 2013, the NMa will merge with the Netherlands Consumer Authority and the Independent Post and Telecommunications Authority of the Netherlands (OPTA), creating a new authority: The Netherlands Authority for Consumers and Markets (ACM). This new authority aims to ensure that markets work in order to protect consumer interests. To this end, the ACM will focus on three main themes: consumer protection, industry-specific regulation, and competition oversight.