Affected market: IT software for the healthcare industry
The OFT’s decision on reference under section 33(1) given on 24 August
2007. Full text of decision published 4 September 2007.
Please note that square brackets indicate figures or text which have
been deleted or replaced with a range by the OFT or at the request of
the parties for reasons of commercial confidentiality.
CompuGROUP UK Ltd is a wholly owned subsidiary of CompuGROUP Holding
AG (CompuGROUP) which develops and supplies software services to the
iSOFT Group plc (iSOFT) provides software and systems to healthcare
provider organisations including the National Health Service (NHS) and
its National Programme for Information Technology (NPfIT). [see note 1] In the 12 months ending 30 April 2006
iSOFT’s UK turnover was approximately £[ ] million.
CompuGROUP intends to acquire the entire issued and to be issued share
capital of iSOFT. The transaction was notified by way of a merger notice
on 30 July 2007. The statutory deadline expires on 28 August 2007.
As a result of this transaction CompuGROUP and iSOFT will cease to be
distinct. The UK turnover of iSOFT exceeds £70 million, so the turnover
test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is
satisfied. The OFT therefore believes that it is or may be the case that
arrangements are in progress or in contemplation which, if carried into
effect, will result in the creation of a relevant merger situation.
The transaction is not being notified in any other national
FRAME OF REFERENCE
The parties submit that their activities do not overlap in the UK as
CompuGROUP does not, currently, conduct business in the UK. However,
outside the UK there is some limited overlap by product or geography in
the supply of Hospital Information Systems (HIS) and in the supply of
Doctor Information Systems (DIS), both of which cover a diverse range of
In terms of HIS, iSOFT supplies patient administration systems,
departmental clinical systems, and electronic patient record systems.
CompuGROUP develops and supplies HIS which can consist of hospital
management, personnel management and billing programmes for the
operation of hospitals and a large number of interface solutions for the
integration of various specialised departments and laboratories.
The functions of DIS range from general practice management software to
billing systems for doctors and dentists through to comprehensive
information solutions for doctors and dentists.
On the supply side, as noted in iSOFT/Torex [see note 2] Clinisys/Torex, [See note
3] IT software for the healthcare sector can be developed anywhere in the world.
Accordingly, software suppliers located outside the UK may bid for contracts to
supply healthcare IT software to the NHS and private hospitals/doctors in the UK.
However, on the demand side in the iSOFT/Torex decision, the OFT found
that the key requirement in marketing and selling a new system is a
local presence. Customers require a local presence particularly in order
to ensure that the requisite installation expertise (and then
maintenance and servicing) is readily available. This view was confirmed
by a third party who agreed that it was important for a firm marketing
in the UK to understand the nature of the UK market, specifically in
relation to the NHS, and hence requires a presence in the UK.
However, the OFT’s conclusion on reference does not turn on the
geographical frame of reference and hence it was not necessary to
conclude on this point.
iSOFT is engaged in the National Health Service's National Programme
for IT (NPfIT) in England where it is the preferred application provider
of core healthcare software to three of five regional clusters across
England under a subcontract with Computer Science Corporation (CSC), the
Local Service Provider for the three regions.
CompuGROUP has never supplied the UK market, nor bid for any contracts
hence there is no overlap in the UK.
THIRD PARTY VIEWS
Third parties contacted by the OFT were unconcerned about this
In considering the relevant geographical scope of the frame of
reference, the OFT found that, consistent with the iSOFT/Torex decision,
a key requirement in marketing and selling an information system to
hospitals and doctors, is a local UK presence. As CompuGROUP has never
supplied the UK market, there are no areas of overlap between CompuGROUP
and iSOFT. The OFT has not received any substantial competition concerns
from third parties.
Consequently, the OFT does not believe that it is or may be the case
that the merger may be expected to result in a substantial lessening of
competition within a market or markets in the United Kingdom.
This merger will therefore not be referred to the Competition Commission
under section 33(1) of the Act.
- The NPfIT aims to create a single integrated record for patients (in
England) that will allow primary and secondary health care providers
access to that record.
- Completed acquisition by iSOFT Group plc of Torex plc, OFT decision
of 24 March 2004.
- Anticipated acquisition by Clinisys Solutions Ltd of Torex Systems
Ltd, OFT decision of 2 January 2005.