Affected market: Healthcare IT software
The OFT’s decision on reference under section 33(1) given on 30 July
2007. Full text of decision published 7 August 2007.
Please note that square brackets indicate text or figures which have
been deleted or replaced with a range at the request of the parties for
reasons of commercial confidentiality.
IBA Health Limited (IBA) is a leading provider of health care IT
solutions in Australasia. IBA’s range of systems are designed to
support workflows across all health sectors including hospitals,
clinics, aged and community care facilities, primary care and claims and
payments processes. IBA’s UK turnover is very limited at £ \ [-] for
the year ended 31 December 2007.
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 year ended 31 December 2006, iSOFT's UK turnover was
approximately £ [-] million.
IBA 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 26
June 2007. The (extended) statutory deadline expires on 7 August 2007.
As a result of this transaction IBA and iSOFT will cease to be distinct.
The UK turnover of iSOFT is over £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.
FRAME OF REFERENCE
The parties submit that they overlap in the supply of Laboratory
Information Management Systems (LIMS) products. LIMS are specific
departmental systems, designed to meet the requirements of a hospital's
laboratory, to prompt clinical processes in the face of specific
diagnoses and to ensure best practice by clinicians in the laboratory.
The parties contend that all types of LIMS should be considered together
as the relevant frame of reference.
It is noted that the parties only overlap in a certain sub-segment of
LIMS, namely in computer-based maternity information services systems
(MIS). MIS are designed to record information about a woman’s pregnancy
and subsequent delivery. At their simplest, MIS may be paper-based
records. More complex versions will be computer based records prompting
clinical care. The NPfIT requires, as part of its core products, a
On the demand side, every MIS has its own specific clinical
specifications and requirements. The OFT has in its iSOFT/Torex [see note 2]
decision found that the functionally of each programme is specific to a particular
department (for example maternity or A&E) and that there is no demand-side
substitution between programmes used by different hospital department [see note 3].
On the supply side, the OFT has previously noted that healthcare IT companies
appeared to be highly specialised by clinical need and that, historically, growth was
through acquisition rather than new entry or expansion [see note 4].
In the absence of competition concerns even on the narrowest reasonable
product scope, that is the supply of MIS systems, it was not necessary
to conclude on the product frame of reference.
On the supply side, as noted in iSOFT/Torex and Clinisys/Torex [see note 5],
IT software for the healthcare sector can be developed anywhere in the world.
For example, both parties have development centres in India. On the demand
side, a hospital’s choice of IT software will depend on their location and sources
of funding. IBA’s MIS is currently used in only [-] hospitals in the UK. In iSOFT/Torex
the supply of secondary healthcare software in the UK was considered to be the
relevant geographic scope. In the context of this assessment the OFT has not
received any compelling evidence that would warrant departing from this view.
Therefore, the UK is considered as the appropriate geographic frame of reference.
The parties submit that while iSOFT’s share in UK hospital information
systems is 30-40 per cent [see note 6], IBA’s share is minimal at less
than  per cent. The parties submit that on any reasonable delineation,
the accretion to market share is negligible.
While there is no publicly available information on market shares for
MIS, there are several other suppliers of MIS besides the parties
including Huntleigh Diagnostics, Scorpio Limited, Euroking, Meditech,
Ciconia and Viewpoint/Stork. One third party estimated the parties'
joint shares at around [10 - 20] per cent (increment: [less than 2]
per cent). Another third party contacted by the OFT estimated the
parties’ combined shares at [20 - 25] per cent (increment [less than
2] per cent). On a world-wide basis, the parties estimated their
combined shares at [5 - 10] per cent (increment: [less than 1] per
cent). Internal documents supplied by the parties confirm the largely
complementary nature of this merger and the limited geographical overlap
of their respective activities.
THIRD PARTY VIEWS
Third parties contacted by the OFT were generally unconcerned about this
transaction. To the extent that concerns were raised, they appeared to
result more from a perceived anti-competitive effect of the NPfIT than
On the narrowest possible frame of reference, the parties overlap in the
supply of MIS in the UK. While there was no independent data on the
parties’ MIS shares available, estimates of the parties’ combined
shares ranged between [15 - 25] per cent. However, according to all
available estimates, the increment resulting from this transaction would
be less than 2 per cent. The OFT has not received any substantiated
competition concerns and several other competitors have been identified.
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 is an ambitious programme which 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.
- Ibid., paragraph 19.
- Ibid., paragraph 20.
- Anticipated acquisition by Clinisys Solutions Limited of Torex Laboratory Systems Limited, OFT decision of 26 January 2005.
- Note that it is not entirely clear whether this covers LIMS only or includes other hospital IT services.