The Competition and Markets Authority (CMA) has provisionally found that the proposed merger of Cochlear Limited (Cochlear) and Oticon Medical, the hearing implants division of Demant A/S (Demant), could “result in worse outcomes for patients and higher prices for the NHS”.
Cochlear and Oticon Medical are the only two suppliers of ‘Passive’ bone conductive solution (BCS) products in the UK, with a share well above 90%. The proposed merger would leave just a single supplier of these products.
Cochlear is also the largest of only two existing suppliers of a newer type of ‘Active’ BCS implant in the UK.
Reduced Competition Concerns
The CMA’s provisional view is that the merger would likely lead to a substantial reduction in competition for certain hearing loss products, specifically BCS products, which bypass the damaged parts of the ear and convert sounds into vibrations that are sent directly to the inner ear. Competition between firms supplying BCS products is critical in driving innovation and the proposed merger could result in less choice, reduced quality or less innovation for patients who need hearing implants.
Clinics and other market participants raised concerns about the proposed merger, prompting the CMA to investigate further. The CMA found no competition concerns in the supply of other hearing implants, such as cochlear implants.
During the next stage of its investigation, the CMA will consider potential remedies for its concerns, including whether halting Cochlear’s purchase of Oticon Medical or preventing the sale of the BCS part of that business is likely to be an effective way to address the competition issues.
“We’re concerned that this deal could seriously reduce competition with patients having fewer suppliers to choose from, potentially losing out from less innovation and lower product quality going forward, as well as in the long term potentially costing the NHS and taxpayers more money. Any remedies offered by the parties that could effectively address our competition concerns and any other adverse effects of the proposed deal will be considered.”
–Kip Meek, Chair of the CMA’s independent inquiry group
The CMA is calling for submissions on practicable remedies to address the provisionally identified substantial lessening of competition, which must be received by May 4th.
Views on the provisional findings are also being welcomed and must be received by May 11th. The final report is due by June 5, 2023.
For more information, visit the Cochlear/Oticon Medical merger inquiry page.
Source: CMA
