Competition Commission blocks foundation trust merger

Following a referral from the Office of Fair Trading, the Competition Commission prohibited the proposed merger between Poole Hospital NHS Foundation Trust and the Royal Bournemouth and Christchurch Hospitals NHS Foundation Trust on 17 October 2013.

The Competition Commission concluded that the proposed merger might be expected to result in a substantial lessening of competition in the wider Dorset area, for the supply of services in 19 elective inpatient services, 34 outpatient services, one non-elective inpatient service (maternity) and one private service (cardiology).

The Commission did not accept that the merger would result in relevant customer benefits in five clinical areas (maternity; cardiology; haematology; accident and emergency; and emergency surgery). The Commission also considered broader clinical benefits, financial savings, merger-avoided costs, merger-enabled investments, balanced portfolio of services and cost savings to commissioners. The Commission did not find that any of the benefits submitted by the parties constituted a relevant customer benefit, as defined by the Enterprise Act 2002.

The two trusts released a joint statement, stating: 'We are deeply disappointed with the Competition Commission's decision to prohibit the proposed merger... We believe merger would have been the best option to ensure we continue to provide high-quality hospital services to local people. We recognise that the Competition Commission has a statutory role to perform and specific criteria which it must use to assess benefits, but we believe that the outcome of the process is fundamentally wrong. The assessment of the merger was always weighted to put competition ahead of benefits to patients, and we do not believe the NHS is best served in this way'.

The decision prompted concerns within the NHS more widely and, in response, the competition authorities and Monitor published a joint statement clarifying how they would work together in the future and emphasising that patients were at the heart of the process. The statement committed to a joint engagement programme to build awareness of the merger control process, the publication of a memorandum of understanding about Monitor's role and a review of existing guidance.

The Office of Fair Trading and the Competition Commission were subsequently merged to form the new Competition and Markets Authority (CMA), creating a single competition authority. The CMA operated in shadow form from 1 October 2013 and took on its full powers from 1 April 2014.