Competition law seems especially vulnerable to ‘the law of unintended consequences’ in the current environment. This can be seen in operation, some argue, by the 8 January referral by the Office of Fair Trading (OFT) of a proposed merger between two NHS trusts (located in Poole, Bournemouth and Christchurch) to the Competition Commission for an in-depth investigation.
That is not just my view as a lay observer of competition law issues. It is a point that experienced competition lawyers have also been privately in touch to make. ‘The biggest waste of money in advisory fees,’ as one put it, adding that the referral is also likely to take up significant management time over several months. And the end of the process, of course, the merger may not be allowed.
That sort of uncertainty and time period could be damaging to a business. But it is the sort of reference, no doubt right in law, where one struggles to see the wider public policy goal that might be reached.
According to Clive Maxwell, OFT chief executive and decision-maker in this case, the justification is this: ‘Our review found that these two foundation trusts compete with each other in a number of specialties, both to attract patients and funding from commissioners.
‘We decided on the basis of the evidence available, including advice from [trusts regulator] Monitor, that we could not rely on the potential benefits from this merger outweighing the expected impact on patients and commissioners of a loss of competition.’
No doubt. But presumably the trusts are not merging in a calculated effort to corner the market, raise prices and generally do over patients (or ‘consumers’ as they might be called here). Trust mergers we have seen elsewhere have been driven by the declared need to save money. Austerity, not imperfect operation of the market, is removing the sorts of choice that really matter to patients – whether or not services they require have been cut or reduced.
Yet the dominant consideration is the assumption that established competition law principles, devised with commercial markets in mind, are in all contexts so closely aligned with the public interest as to be pretty much beyond question.
Applied to the markets that surround the NHS that feels, if it was ever appropriate, like a rule for the boom-times – an okay way of deciding how best to spend ample funds.
In the current economic climate, many of the assumptions as to what delivered the right outcome have been set to one side. The Bank of England’s monetary policy committee is one example – varying from its narrow remit on containing inflation, in order to support a strategy aimed at supporting growth. Most would agree that overall it has been right to do so.
So, surely the next time government or the EU has cause to consider the way competition law principles perform in this sort of scenario, it is worth asking if the consequence of maintaining the status quo is the outcome that was intended.
Eduardo Reyes is Gazette features editor
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