University laundry services merger ‘could reduce competition’, says watchdog
The acquisition of Washstation by West Yorkshire-based commercial laundry equipment supplier JLA could mean universities and colleges face higher prices or lower quality for student laundry services, the competition watchdog has found.
Ripponden-based JLA New Equityco acquired Washstation in May 2017. Both firms rent out and maintain washing machines and tumble dryers to universities, colleges and student accommodation providers for use by students.
The Competition and Markets Authority (CMA) started investigating after receiving a complaint about the completed merger.
It found that JLA and Washstation were the two main suppliers of managed laundry services to higher education customers, with a combined share of supply of more than 90%. Prior to the merger, JLA and Washstation were each other’s closest competitor and they faced limited pressure from other competitors.
The CMA considered whether other companies would enter or expand in the market to challenge the merged entity but found that, although some competitors had indicated an intention to grow, this could not be relied on to offset the adverse effects of the merger.
The watchdog said it is concerned that the merger may substantially lessen competition in the supply of managed laundry services to higher education customers, leading to higher prices, lower quality or less innovation in these services. This could result in students paying more or getting a worse quality of service.
The CMA said the case will now be referred for an in-depth phase two investigation by an independent group of panel members “unless JLA is able to offer a solution at this stage to address the competition concerns”.
