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U.S. Justice Department Clears Joint Venture

WASHINGTON – The U.S. Department of Justice announced this summer that it won’t oppose a new venture allowing 10 textile maintenance companies to bid jointly to provide textile rental and laundry services to national healthcare outpatient centers.
Based on representations made in the proposal by Linen Systems for Healthcare, the Justice Department concluded that the joint venture isn’t likely to produce anticompetitive effects and could create a new competitor for national accounts, according to the Department’s Aug. 8 press release.
Linen Systems for Healthcare requested a business review letter expressing the Department’s enforcement intentions regarding formation of its medical laundry network, now operating under the name MEDtegrity.
Members of the group are:
• Admiral Linen and Uniform Service, Houston
• CleanCare, Pittsburgh
• Economy Linen and Towel Service, Dayton, Ohio
• Faultless Linen, Kansas City, Mo.
• Handcraft Uniform Rental Service, Richmond, Va.
• MedClean, Chicago
• MediCleanse, Renton, Wash.
• MediCo Professional Linen Service, Los Angeles
• Sohn Linen, Lansing, Mich.
• Unitex Textile, Mt. Vernon, N.Y.
The members seek to compete better for national account business from various types of healthcare outpatient centers (HOC).
The growing number of national accounts seeking a single-source supplier of textile and rental services has left the 10 local suppliers at a competitive disadvantage against larger, multi-plant companies, Linen Systems for Healthcare says in its proposal.
According to the request, the 10 member companies are not competitors because of significant distances between their plants.
Thomas Barnett, assistant attorney general, cited the proposal extensively in an Aug. 6 letter informing Linen Systems for Healthcare’s attorney of the Department’s ruling. In it, he repeats a lengthy description of a typical route delivery system.
“Because of the use of this van-and-route system, you assert that healthcare textile rental and laundry firms generally are limited to servicing clients within a 100-mile radius of a plant.
“You contend that the [10] textile maintenance company members should not be viewed as significant rivals of one another because, with one exception, the members’ plants are more than 210 miles apart from each other. You represent that this distance precludes them from competing in any significant way.”
Price discussions among members will be limited to those necessary to provide a joint bid, the Justice Department says, and additional limitations will be put in place to prevent the exchange of competitively sensitive information that doesn’t relate to the joint venture.
Results of any meeting with a national HOC will be reported to MEDtegrity’s Executive Committee, including an executive director who isn’t associated with MEDtegrity or any of its competitors.
Member companies will remain free to bid for national business outside the joint venture and continue to act independently of each other in seeking business within their own localities.
Linen Systems for Healthcare says in its proposal that “beyond training staff to meet the Occupational Safety and Health Administration’s bloodborne pathogens standard, there are few or no barriers to entry to the healthcare textile rental and laundry services market,” according to Barnett.

Have a question or comment? E-mail our editor Matt Poe at [email protected].