Newsflash: Manchester merger cleared

In a landmark decision the Competition and Markets Authority (CMA) has approved the merger of Central Manchester University Hospitals NHS FT and University Hospital of South Manchester NHS FT.

Working closely with the trusts’ programme office and the leading competition consultants Aldwych Partners, Hempsons are advising both trusts about competition issues as well as all other legal merger issues.

The proposed merger has widespread backing in Greater Manchester and nationally but a potential hurdle was reduced competition in the provision of services. It therefore required CMA clearance.

A summary of the final report published 1 August 2017 sets out the CMA’s reasons for approving the merger. It accords significant weight to the advice and views of NHS Improvement, NHS commissioners and Manchester City Council. In summary it finds that:

• Competition in the NHS is only one of a number of factors which influence the quality of services for patients – ‘we have found in this inquiry that it is not the basic organising principle for the provision of NHS services’
• Many of the normal conditions and dynamics of competition between suppliers in other industries are not present in the NHS
• The financial pressures on the NHS (in the context of rising demand), and the recent focus by national bodies (NHS England, NHS Improvement and the Care Quality Commission) on greater collaboration between providers and commissioners to address these pressures in local health economies, have reduced the role of competition
• There are 11 relevant customer (patient) benefits that are likely to represent improvements in outcome for patients, which would be unlikely to accrue without the merger.

Hempsons are the leading law firm for NHS mergers and acquisitions – we have advised on almost every such transaction that has taken place in the last five years. The CMA’s decision is likely to be of high importance in future transactions in understanding its approach to transactions.