The Competition and Markets Authority (CMA) has found that the completed merger between Circle and BMI could reduce competition in two local areas, however it has said the deal poses no national concerns.

After completing its initial Phase 1 investigation, the CMA has found that the merger could result in a substantial reduction in competition between private healthcare services in Birmingham and Bath. 

The CMA is concerned that if the businesses were to merge, patients who pay for their own healthcare in Birmingham and Bath could face higher prices and that NHS and privately funded patients could face a lower quality of service in those areas.

The companies have until Friday 17 April 2020 to address the CMA’s concerns. 

If they are unable to do so, the deal will be referred for a Phase 2 investigation.

At Phase 2, generally limited to 24 weeks, a CMA panel of independent members conducts an in-depth investigation to assess if a merger is expected to result in a substantial lessening of competition.

However, as part of its assessment, the CMA has taken into account the impact of the COVID-19 outbreak by considering, not only the current provision of private healthcare, but also how this is likely to impact the opening of new hospitals both by the merged company and their competitors.

Circle and BMI Healthcare previously received a derogation from the CMA to co-operate on Covid-19 related operational matters. 

Both groups have committed their full resources to assist the government’s response to Covid-19, and agreed a formal partnership with the NHS to support the national effort.

They have offered their full capacity, including specialised ITU beds and ventilators, across the organisations’ 54 hospitals.

Circle and BMI Healthcare first announced their plans to merge in December; they both provide elective care to NHS and privately funded patients in the UK. 

BMI manages 52 private hospitals and clinics in the UK, while Circle currently operates two private hospitals in Bath and Reading and is planning to open a third hospital in Birmingham this year.

Commenting on CMA’s findings, Joel Bamford, senior director at the authority, said: “If local concerns can be overcome, we will clear this merger. At the moment though, we have found that if it goes ahead as planned, competition will be reduced and it could negatively impact patients in Bath and Birmingham.”

He added: “We recognise that this is a difficult time, with private hospitals having effectively put their entire hospital capacity temporarily under the control of the NHS to deal with the coronavirus outbreak. It remains important that we protect competition between private healthcare providers and the benefits it can bring to patients.”

Paolo Pieri, Circle Health chief executive, said: “We appreciate the CMA working in challenging conditions to reach this conclusion, and we look forward to proceeding with integration planning.”

He added: “Our current businesses are fully focused on prioritising our resources to support the NHS on Covid-19, helping vulnerable patients to access essential care and treatment across the country.  In this stressful period, we are very proud of our staff working shoulder to shoulder with NHS colleagues to deliver high quality care at a time of national crisis.”