The Competition and Markets Authority (CMA) has taken decisive action to prevent a merger between two prominent players in the UK’s hearing implant sector. By intervening, the CMA aims to safeguard the interests of patients who rely on hearing implants and protect the NHS from potential cost implications.
Concerns over Competition in Bone Conduction Solution (BCS) Products
The proposed merger between Cochlear Limited and Oticon Medical, the hearing implants division of Demant A/S, prompted an in-depth Phase 2 investigation by the CMA in December 2022. The focus of the investigation was on bone conduction solution (BCS) products, which involve implants that bypass damaged parts of the ear, converting sounds into vibrations sent directly to the inner ear.
CMA’s Final Report on the Merger: Findings and Conclusions
After a thorough examination, the CMA’s final report on the merger revealed that the consolidation could result in a significant lessening of competition in the BCS product market.
- The merger would result in the removal of a significant competitor in the BCS market, consolidating the merged businesses’ market share to over 90 percent.
- Existing BCS competitors and other hearing solutions would not adequately compensate for the competition lost due to the merger.
- The potential for new players to enter the market or smaller competitors to expand is limited, and insufficient to address competition concerns.
Prohibition of the Sale to Preserve Competition
To address these concerns, the independent inquiry group of the CMA has enforced a prohibition on the sale of Oticon Medical’s BCS business to Cochlear. Instead, Demant will retain its BCS business, allowing for continued competition between the two companies. This remedy ensures that patients have a choice of providers, maintains quality, encourages innovation, and prevents potential price increases for the NHS.
Impact on Cochlear Implants (CI) and Their Separation
The CMA also examined the impact on another type of hearing implant, cochlear implants (CI), but found no competition concerns in that segment. As the CI and BCS businesses are largely operated separately, they can be separated without diminishing their competitiveness. Therefore, the CMA has allowed the sale of Oticon Medical’s CI business to Cochlear to proceed.
Prioritizing Patient Well-being and NHS Costs
Throughout the investigation, the CMA carefully considered evidence and input from clinics and other market participants. Kip Meek, the chair of the independent panel of experts leading the investigation, emphasized the importance of patient well-being. The CMA’s decision aims to prevent potential negative impacts on patient choice, innovation, and quality. Additionally, by preserving competition, the decision helps the NHS avoid potentially higher prices for BCS products.
Implementation of the CMA’s Decision
With the decision made, the CMA will oversee the separation of the businesses involved and take necessary steps to implement the remedy within 12 weeks. This process ensures that competition remains vibrant in the UK’s hearing implant sector, benefitting patients, healthcare providers, and the overall healthcare system.
Source: Gov[Dot]UK
