Healthcare sector regulator Monitor has confirmed the Office of Fair Trading will in future have responsibility for assessing any merger involving an NHS foundation trust.
The decision means that mergers between FTs and NHS trusts – which until now had been reviewed by the NHS Co-operation and Competition Panel – will now be subject to review by the OFT, the national general competition watchdog.
In a briefing note for foundation trusts issued on Friday (22 March), Monitor said: “The OFT has clarified that mergers between an NHS foundation trust and an NHS trust may constitute a relevant merger situation and be subject to review by the OFT.”
The 2012 Health Act gave the OFT explicit responsibility for mergers between foundation trusts.
But as HSJ reported in January, the OFT itself concluded last year that mergers with non-FTs also fell within its jurisdiction. That view has now been accepted by Monitor.
OFT guidance issued the same day stated that the Health Act had clarified the watchdog had a role to play examining foundation trust mergers, whether those mergers were between FTs or between FTs and “other enterprises”. The OFT believes NHS trusts are capable of being considered “enterprises” under the terms of the 2002 Enterprise Act, and that therefore a merger between an NHS trust and an FT could qualify for OFT investigation.
The watchdog does not believe its remit extends to mergers involving only NHS trusts. This is because it believes both organisations in such a merger would ultimately be under control of the health secretary, and there would therefore be “no change of control”.
The development could have significant implications for the “pipeline” of trusts seeking to attain FT status by merging with an existing FT.
One senior competition lawyer told HSJ in January that on some merger transactions “the CCP has taken a more pragmatic view, recognising that we’ve got to have some consolidation in this sector”.
“If the OFT comes in and looks at these things afresh, they might say, ‘why are we approving any of these things?’” he added.
If the OFT decides that the merger might lead to a substantial lessening of competition, and this outweighs any patient benefits of the transaction, it will refer the merger to the Competition Commission, Monitor’s guidance explains.
The first ever proposed merger between two foundation trusts – between Royal Bournemouth and Christchurch Hospitals and Poole Hospital – is currently being reviewed by the Competition Commission, after an OFT referral earlier this year.