1. Introduction

Industrial washing concentration refers to a market situation in which a small number of enterprises control a substantial proportion of industrial laundry, textile-cleaning, garment-finishing and commercial washing services.

Industrial washing is an important supporting industry for several sectors, including:

Hospitals and healthcare institutions.

Hotels, resorts and restaurants.

Textile and garment manufacturing.

Pharmaceutical and food-processing industries.

Industrial uniforms and protective clothing.

Public institutions, prisons and military establishments.

Market concentration may arise through mergers, acquisitions, exclusive supply agreements, joint ventures, control of industrial washing facilities or the acquisition of competing laundry-service providers.

In Morocco, industrial washing concentration must principally be examined under Law No. 104-12 on the Freedom of Prices and Competition, together with Law No. 20-13 relating to the Competition Council.

The central legal question is whether concentration improves efficiency and service quality or creates market power that substantially restricts competition.

2. Meaning and Nature of Industrial Washing Concentration

Industrial washing concentration occurs when a limited number of undertakings acquire significant control over the supply of industrial washing services.

For example, assume that five companies operate in the Moroccan industrial washing market:

If Company A acquires Company B, the combined undertaking would hold 65% of the market.

This transaction could raise serious competition concerns, particularly where customers have few alternative providers.

Important forms of concentration include:

Horizontal concentration – mergers between competing industrial washing companies.

Vertical concentration – acquisition of textile collection, detergent distribution or linen-rental businesses.

Conglomerate concentration – acquisition of businesses operating in related hospitality, healthcare or textile markets.

Geographic concentration – consolidation of washing facilities within particular cities or industrial regions.

Infrastructure concentration – control over specialised washing machinery, water-treatment facilities and sterilisation technology.

3. Legal Framework in Morocco

A. Law No. 104-12 on Freedom of Prices and Competition

This legislation provides the principal framework for controlling restrictive competition practices and economic concentrations.

Relevant legal principles include:

Freedom of commercial and industrial activity subject to competition rules.

Prohibition of anticompetitive agreements.

Prohibition of abuse of dominant position.

Merger and acquisition notification and review.

Examination of transactions capable of restricting competition.

Competition Council intervention where statutory requirements are satisfied.

B. Law No. 20-13 on the Competition Council

The Competition Council has an important institutional role in monitoring economic concentrations and restrictive practices.

Its responsibilities include examining transactions, investigating competitive concerns and issuing decisions or opinions within its statutory authority.

C. Relevant Competition Assessment

For industrial washing transactions, the authority should consider:

Market shares and concentration levels.

Barriers to entry.

Availability of alternative washing facilities.

Customer dependence.

Access to industrial machinery and technology.

Water, electricity and environmental compliance costs.

Potential foreclosure of independent operators.

Effects on prices, quality and innovation.

4. Relevant Market Definition

Correct market definition is essential before determining whether industrial washing concentration is harmful.

A. Product market

The Competition Council may distinguish between:

General industrial laundry services.

Hospital linen washing and sterilisation.

Pharmaceutical cleanroom garment washing.

Hotel and restaurant linen washing.

Industrial protective clothing cleaning.

Textile finishing and specialised washing.

Rental, collection and maintenance of industrial linen.

These services are not necessarily interchangeable. Hospital sterilisation services, for example, may require specialised equipment, regulatory compliance and quality-control systems that ordinary laundry operators cannot provide.

B. Geographic market

The relevant geographic market may be:

National, where companies provide services throughout Morocco.

Regional, where transport costs restrict competition.

Local, where customers require frequent collection and delivery.

Facility-specific, where specialised washing infrastructure is difficult to duplicate.

C. Market concentration indicators

The Herfindahl-Hirschman Index (HHI) is useful for examining concentration.

It is calculated by adding the squares of the market shares of all undertakings.

For example, using the hypothetical market above:

\[ HHI=40^2+25^2+15^2+12^2+8^2 \]

\[ HHI=2,538 \]

After the acquisition of Company B by Company A:

\[ HHI=65^2+15^2+12^2+8^2 \]

\[ HHI=4,638 \]

The increase of 2,100 points indicates a substantial structural change requiring careful investigation. However, HHI is an analytical indicator, not an automatic legal test of illegality under Moroccan law.

5. Main Competition Concerns

A. Creation of dominant market positions

A merger between major industrial washing companies may create an undertaking with sufficient market power to operate independently of competitors and customers.

For example, if two major hospital-laundry providers merge, hospitals may lose the ability to negotiate competitive prices.

B. Price increases

A concentrated industrial washing market may facilitate:

Increased washing charges.

Higher linen-rental prices.

Additional collection and delivery fees.

Unjustified sterilisation charges.

Higher long-term contractual prices.

C. Customer foreclosure

A dominant washing company may enter exclusive agreements with major hospitals, hotels and textile manufacturers.

These agreements can prevent smaller laundry operators from accessing commercially important customers.

D. Input foreclosure

A vertically integrated undertaking may control:

Industrial detergents.

Specialised washing chemicals.

Water-treatment systems.

Linen-rental infrastructure.

Industrial washing machinery.

Such control may increase competitors' operating costs.

E. Reduction in service quality

Concentration may reduce incentives to improve:

Washing standards.

Hygiene procedures.

Delivery times.

Equipment maintenance.

Environmental performance.

Customer service.

F. Barriers to entry

Industrial washing requires significant capital investment. New entrants may face difficulties relating to machinery, water consumption, wastewater treatment, industrial land, skilled workers and environmental permits.

These barriers may strengthen the market position of established companies.

6. Six Important Case Laws and Competition Decisions

Important clarification: The following are genuine foreign judicial or competition-authority precedents relevant by analogy. They are not Moroccan judgments, and they should not be presented as decisions of Morocco's Competition Council. Morocco's statutory framework remains the primary law.

Case 1. JLA New Equityco Limited / Washstation Limited (2018) – United Kingdom

CMA merger investigation and final decision

Facts:

JLA acquired Washstation, its closest competitor in the provision of managed laundry services to universities, colleges and student accommodation providers.

The two companies were major suppliers of washing machines, laundry facilities and related management services.

Legal issue:

Whether the acquisition substantially reduced competition in managed laundry services for higher education institutions.

Decision:

The UK Competition and Markets Authority concluded that the merger substantially reduced competition. It required JLA to sell Washstation to restore competitive conditions.

Legal principles:

Elimination of the closest competitor may create substantial market power.

High market shares can indicate serious competition concerns.

Potential entry by smaller competitors must be assessed realistically.

Structural remedies may be necessary to restore competition.

Application to Morocco:

If two major Moroccan industrial washing companies supplying universities, hotels or hospitals merge, the Competition Council should examine whether sufficient independent competitors remain.

Case 2. Elis UK Limited / Central Laundry Limited (2020) – United Kingdom

CMA merger investigation

Facts:

Elis acquired Central Laundry Limited, which provided general linen and laundry services.

The CMA examined the supply of healthcare laundry services and considered the geographic area around the acquired company's washing facility.

Legal issue:

Whether the acquisition would eliminate effective competition in healthcare linen and laundry services.

Decision:

The CMA cleared the transaction under its de minimis exception to the duty to refer, notwithstanding its identification of certain competitive concerns.

Legal principles:

Geographic market definition is important in industrial laundry.

Different customer categories may experience different competitive effects.

Smaller hospitals may have fewer alternatives than large institutions.

The actual strength of remaining competitors must be examined.

Application to Morocco:

A washing company operating in Casablanca may not necessarily compete effectively with a provider in another region because of transportation expenses, delivery schedules and specialised facility requirements.

Case 3. Berendsen (Elis) / Kings Laundry (2019) – Ireland

Competition and Consumer Protection Commission, Merger Determination M/18/063

Facts:

The proposed transaction involved Elis/ Berendsen and Kings Laundry, which operated in the healthcare and hospitality linen-rental and maintenance sectors.

The Irish authority examined the competitive significance of Kings Laundry as an expanding independent competitor.

Legal issue:

Whether the acquisition would remove an important competitive constraint in healthcare and hospitality laundry services.

Decision:

The CCPC's investigation raised significant concerns about the effects of the proposed merger, including the possibility that the loss of Kings Laundry would weaken competition.

Legal principles:

Authorities must consider future competitive expansion.

A relatively small competitor may be an important emerging competitive constraint.

Market shares alone do not determine the competitive significance of an undertaking.

Counterfactual analysis is important in merger review.

Application to Morocco:

The Competition Council should examine whether a Moroccan regional laundry company is likely to expand into hospital or hotel washing services before approving its acquisition by a national market leader.

Case 4. United States v. Blue Bell, Inc. (1975), 395 F. Supp. 538

United States District Court, Middle District of Tennessee

Facts:

The case concerned acquisitions and competitive relationships involving industrial rental garments and affiliated laundry businesses.

The court considered the relationship between garment manufacturers and laundry companies under common ownership.

Legal issue:

Whether vertical integration could foreclose competing garment manufacturers from selling to independent laundry businesses.

Decision and principle:

The court recognised that common ownership of suppliers and customers could eliminate an independent commercial opportunity and foreclose competitors from an important market.

Legal principles:

Vertical integration may produce foreclosure.

Captive purchasing arrangements can distort competition.

Relevant markets must reflect actual competitive relationships.

Acquisition analysis must consider both direct and indirect competitive effects.

Application to Morocco:

If a large industrial washing company acquires a major protective-clothing manufacturer and exclusively uses its own garments, competing garment suppliers may lose access to an important customer base.

Case 5. Japan Fair Trade Commission – Acquisition of Shares in Hotel and Hospital Linen Service Businesses (2010)

JFTC business combination review

Facts:

The JFTC examined acquisitions involving businesses supplying hotel linen and hospital linen services.

In the hospital linen segment in the Shikoku region, the combined undertaking was expected to hold approximately 35% of the market, with an HHI of approximately 2,900 and an increase of approximately 400 points.

Legal issue:

Whether the share acquisition would substantially restrict competition in hospital linen services.

Assessment:

The JFTC considered the presence of other significant competitors, excess laundry-factory capacity and evidence of new entry by another undertaking.

Legal principles:

Market shares and HHI are relevant but not conclusive.

Available production capacity can constrain a merged business.

Potential entry can reduce competitive concerns.

Actual competitive conditions matter more than concentration figures alone.

Application to Morocco:

The Competition Council should investigate whether other Moroccan washing facilities have sufficient spare capacity to supply hospitals if a major laundry provider increases prices.

Case 6. Micronclean Limited / Berendsen Cleanroom Services Limited (2017) – United Kingdom

CMA market-sharing enforcement decision

Facts:

Two suppliers of specialised cleanroom laundry services operated through arrangements involving the Micronclean brand.

The businesses entered into reciprocal trademark licensing arrangements under which they agreed not to compete for each other's customers.

The arrangements involved the allocation of customers by geographical territory and/or customer category.

Legal issue:

Whether agreements between industrial washing competitors unlawfully restricted competition.

Decision:

The CMA found that the companies had breached competition law and imposed a combined penalty of approximately £1.71 million.

Legal principles:

Market allocation between competitors is prohibited.

Joint commercial arrangements cannot be used to eliminate competition.

Customer and territorial allocation can constitute serious restrictions.

Cooperation agreements must not become mechanisms for market sharing.

Application to Morocco:

Industrial washing companies must not divide hospital, hotel or pharmaceutical customers between themselves under joint branding, licensing or service arrangements.

These six precedents provide a useful comparative framework for examining industrial washing concentration and its competitive consequences.

7. Application of Moroccan Law to Industrial Washing Concentration

The following provisions are particularly important.

WIPO+3

A. Merger notification thresholds

Under Article 12, notification is required if at least one of the statutory conditions is met.

The traditional implementing thresholds include:

Combined worldwide turnover of at least MAD 750 million.

Moroccan turnover of at least MAD 250 million for at least two parties.

Combined market share exceeding 40% in the relevant Moroccan market.

The applicable thresholds should be checked against any subsequent regulatory amendments before a transaction is filed.

WIPO+1

B. Substantive assessment

Article 16 is especially important because it requires examination of whether a concentration creates or strengthens:

A dominant position.

Buyer power that places suppliers in a position of economic dependence.

The Council must also consider whether the transaction makes a sufficient contribution to economic progress to compensate for competitive harm.

C. Remedies

Under Article 17, possible outcomes include:

Conditional approval.

Behavioural commitments.

Structural remedies.

Obligations to preserve sufficient competition.

Prohibition of the transaction.

Measures restoring effective competition.

WIPO+1

8. Hypothetical Moroccan Case Study

Consider a hypothetical acquisition involving two industrial washing companies operating in Casablanca and Rabat.

Before the acquisition:

Company A controls 35% of the market.

Company B controls 30%.

Company C controls 20%.

Other companies control 15%.

After the acquisition, Company A would control 65%.

The transaction could create several competition concerns:

Hospitals may become dependent on one major washing provider.

Smaller laundry operators may lose access to commercial customers.

Hotel chains may face higher linen-cleaning charges.

Independent suppliers may experience discriminatory purchasing conditions.

New entrants may find it difficult to obtain sufficient customers to justify investment.

Possible regulatory response:

The Competition Council could require the merged company to provide non-discriminatory access to essential facilities, maintain separate commercial arrangements, preserve certain contracts for competing operators or divest a washing facility.

If effective competition cannot be preserved, prohibition may be appropriate.

9. Compliance Obligations for Industrial Washing Companies

Industrial washing businesses should establish the following compliance measures:

Merger compliance

Conduct a merger-control assessment before acquisitions.

Identify changes in direct and indirect control.

Assess market shares and turnover.

Obtain approval before implementing a notifiable transaction.

Commercial compliance

Avoid customer allocation agreements.

Avoid price-fixing arrangements.

Avoid unjustified exclusivity.

Maintain independent pricing decisions.

Prevent discriminatory treatment of competing customers.

Corporate governance

Introduce competition compliance policies.

Conduct periodic internal audits.

Train procurement and sales personnel.

Review joint ventures and licensing arrangements.

Document legitimate business justifications for commercial restrictions.

10. Economic and Consumer Impact

Concentration is therefore not automatically harmful. Economies of scale, advanced washing technology, improved wastewater treatment and investment in sterilisation facilities can generate significant economic benefits.

11. Recommendations for Moroccan Competition Policy

The following measures would strengthen competition in the industrial washing sector:

Market monitoring: Periodically assess concentration in hospital, hospitality and industrial laundry services.

Merger scrutiny: Examine acquisitions involving major regional washing facilities.

SME protection: Prevent dominant operators from excluding smaller independent providers through unfair contractual arrangements.

Infrastructure access: Examine whether essential facilities are being used to foreclose competitors.

Public procurement: Ensure that hospital and government laundry contracts provide genuine opportunities for competing suppliers.

Environmental standards: Apply wastewater, chemical-disposal and hygiene requirements consistently without creating unnecessary entry barriers.

Competition compliance: Encourage independent pricing, transparent procurement and lawful commercial cooperation.

12. Conclusion

Industrial washing concentration is an important competition-law issue because industrial laundry services support essential sectors such as healthcare, hospitality, pharmaceuticals and manufacturing.

Under Moroccan Law No. 104-12, mergers and acquisitions in this industry must be assessed according to their effects on market structure, dominance, buyer power, entry barriers and economic efficiency.

The comparative decisions involving JLA/Washstation, Elis/Central Laundry, Berendsen/Kings Laundry, Blue Bell, the Japanese hospital linen market and Micronclean demonstrate that competition authorities must examine not only market shares but also customer dependence, infrastructure control, potential competition and vertical foreclosure.

The central legal principle is that industrial washing concentration should be permitted when it produces genuine economic efficiencies without substantially undermining effective competition, but should be restricted or prohibited when it creates or strengthens market power at the expense of customers, suppliers and competing undertakings.