Affected market: Software for the healthcare industry
Full text of the decision: isoft2.pdf
Undertakings in lieu of reference: isoftundertakings2.pdf
Undertakings accepted decision
The OFT's decision on reference under section 22 given on 29 April 2004.
iSOFT Group plc (iSOFT) provides software and systems to healthcare provider organisations including the NHS.
Torex plc (Torex) provides healthcare technology software and systems for healthcare providers to GPs, laboratories, hospitals and community care. It also provides the hardware, installation and support that customers require.
On 23 December 2003 iSOFT merged with Torex. Subsequent to the completion of the transaction, iSOFT gave the OFT initial 'hold separate' undertakings pursuant to s71 of the Enterprise Act 2002 (the Act).
As a result of this transaction, iSOFT and Torex have ceased to be distinct enterprises. The turnover test and the share of supply test in section 23 of the Act are met. The share of supply test is met in respect of (a) the supply of Patient Administration Systems (PAS) to National Health Service (NHS) hospitals in the UK and (b) the supply of Laboratory Information Management Systems (LIMS) to NHS hospitals in the UK. The OFT believes that it is or may be the case that a relevant merger situation has been created for the purpose of section 22(1)(a) of the Act.
By way of a decision of 24 March 2004 the OFT announced that, on the evidence available to it, the OFT believes that it may be the case that the merger may be expected to result in a substantial lessening of competition in the supply of LIMS to NHS hospitals (the Decision). For the reasons set out in the Decision, the OFT believes that there is a realistic prospect that, absent the merger, Torex would have represented a substantial competitive constraint on iSOFT in respect of the supply of LIMS to NHS hospitals, and that other suppliers might not exert sufficient competitive pressure post merger to offset the loss of that constraint. A copy of the Decision can be downloaded above.
On this basis, the OFT decided that the merger would be referred to the Competition Commission unless iSOFT gave suitable undertakings pursuant to section 73 of the Enterprise Act to remedy the competition concern arising as a result of the merger.
iSOFT offered to give undertakings to divest the entire Torex LIMS business, including all legacy contracts, staff and intellectual property rights.
On 6 April 2004, the OFT published the proposed undertakings inviting interested parties to give their views on them to the OFT. The OFT did not receive any responses to suggest that the proposed undertakings were not appropriate to remedy, mitigate or prevent the competition concern identified.
The merger would be referred to the Competition Commission if iSOFT failed to give suitable undertakings pursuant to section 73 of the Act to address the competition concern outlined above. The OFT has decided to accept the proposed undertakings in lieu of reference as they would address that competition concern.
This merger will therefore not be referred to the Competition Commission and the undertakings which have been signed by iSOFT, the text of which can be downloaded above, will come into effect from this date.