The OFT has made the first merger reference of NHS foundation trusts to the Competition Commission. Section 79 of the Health and Social Care Act 2012 recently confirmed that the OFT should assess the competition aspects of foundation trust mergers in co-operation with the new Health sector regulator, Monitor. The latter will shortly enjoy concurrent competition powers with the OFT under the Competition Act 1998 and for market investigations in the health sector.
For mergers involving NHS foundation trusts, Section 79 of the Health and Social Care Act 2012 requires the OFT to notify to Monitor as soon as the OFT decides to carry out an investigation under the UK merger control rules. Monitor must then provide the OFT with advice on the effect of the matter under investigation on benefits for people who use health care services provided for the purposes of the NHS; and such other matters relating to the matter under investigation as Monitor considers appropriate.
The OFT decided to refer the merger of the only two NHS district general hospitals in Bournemouth and Poole because they compete closely for GP referrals for many specialties, with much of their income depending on the number of patients referred to them in line with the general rule that ‘money follows the patient’. The OFT also found that it is likely that the merger would result in few realistic alternative providers for patients and NHS commissioning groups in Dorset.
Competition concerns were considered to arise in several medical specialties (including rheumatology, rehabilitation, general medicine, general surgery, geriatric medicine, dermatology, clinical haematology, oral and maxillofacial surgery, cardiology and palliative medicine). In particular, the OFT had doubts as to whether the merger might reduce the hospitals’ incentives to continue to enhance the quality of those services over the minimum required standards and would result in less choice for commissioners wishing to reorganise services.
On the basis of the evidence available, including the advice received from Monitor, the OFT decided that it could not rely on the potential benefits from this merger outweighing the expected impact on patients and commissioners of a loss of competition.
The Competition Commission is expected to report by 24 June 2013.
On January 20, 2013