The proposed acquisition of Heatherwood and Wexham Park Hospitals Foundation Trust by Frimley Park Hospital Foundation Trust has been cleared by the Competition and Markets Authority, the watchdog has announced.

The decision paves the way for the first merger between two foundation trusts. A previous attempt, by Royal Bournemouth and Christchurch Hospitals and Poole Hospital foundation trusts, was blocked by the Competition Commission last year.

In a statement Frimley Park Hospital said it was pleased with the decision and that following the completion of a full business case it would go through the process of securing the necessary “board, governor and regulatory approvals”.

The FTs hope the acquisition will address long-running financial problems and repeated care failings at Heatherwood and Wexham.

The trust was placed in special measures at the beginning of May after the Care Quality Commission judged its leadership, safety and responsiveness to patient needs to be “inadequate”.

The CMA concluded competition would not be significantly weakened because of “strongly performing NHS hospitals located nearby which offer similar services”. It listed Royal Berkshire Hospital Foundation Trust, Ashford and St Peter’s Hospitals Foundation Trust, Royal Surrey Country Hospital, and the Royal Buckinghamshire Hospital.

It said the “majority of third parties supported the merger” and that Monitor has told the CMA “in its view the merger represents the best available solution to improve patient services at Heatherwood and Wexham”.

Monitor said in a statement it had advised “that the merger was likely to deliver a quicker and more sustainable solution to the issues faced by the trust than further regulatory intervention”.

The regulator said it would review the proposals and work to mitigate “risks around the sustainability of the enlarged organisation”.

Monitor chief executive David Bennett said the CMA’s decision demonstrated “competition rules don’t get in the way of well thought out transactions”.

The Foundation Trust Network said it welcomed the decision and “particularly the speed at which it has been reached”.

FTN chief executive Chris Hopson said: “We led calls for a new approach to NHS merger control that placed greater emphasis on patient and NHS need, for the statutory sector to work more effectively together and for a faster process.

“It’s good that these have been delivered in this decision. We need this to continue in future cases. It will, though, be a frustration to the Foundation Trusts in Bournemouth and Poole that they haven’t been able to benefit from this changed approach.”