OFT moves to extend its jurisdiction over NHS mergers

It would go beyond the reforms brought in by the 2012 Health Act, which gave the competition watchdog responsibility for reviewing mergers between foundation trusts.

Until now, mergers between FTs and non-FTs have been reviewed by the NHS Co-operation and Competition Panel, which will become part of healthcare sector regulator Monitor in April. However, the OFT has now concluded that these mergers also fall within its jurisdiction, under law predating the Health Act.

OFT mergers director Sheldon Mills told a recent seminar in London that the 2002 Enterprise Act gave the watchdog responsibility for reviewing all mergers between distinct “enterprises”, meaning undertakings carried out for “gain or reward”.

Policy changes introduced over recent years meant both FTs and NHS trusts had “a substantial level of financial autonomy to apply any surplus that they derive from their activities for their own benefit”, he told the Westminster Health Forum on 29 November. “In essence,” he said, this meant NHS trusts were “acting in one sense as independent entities in a market based healthcare economy”.

While services were free for patients, commissioners paid for them. The OFT thought that “clearly” meant those services were “provided otherwise than free of charge”.

Mr Mills continued: “In sum, therefore, we think it’s reasonable to conclude that NHS trusts are enterprises under the provisions of our act.”

He added that the way the OFT looked at mergers was “relatively similar” to the way in which the CCP had been reviewing them in the past.

However, one senior competition lawyer told HSJ the development could affect NHS trusts seeking to attain FT status by merging with an existing FT. Over the years, he explained, the CCP, Monitor and the Department of Health had developed a “particular policy approach” to the competition implications of NHS mergers: “On some transactions,” he said, “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 this afresh, they might say ‘why are we approving any of these things?’”

He added: “If the involvement of the OFT signals a more formal approach to mergers, this may have implications both for the FT pipeline timetable, and also for the resources merging trusts will have to secure and pay for to navigate through the process.”

A Monitor spokeswoman said it was currently working with the OFT and the CCP “to decide who will have oversight in the future” over NHS trust-to-FT mergers.