Completed acquisition by British United Provident Association Limited of ANS 2003 plc

Affected market: Care homes

No. ME/1971/05

Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, third party views assessment and decision.

The OFT's Decision on reference under section 22 of the Enterprise Act 2002 given on 10 January 2006. Full text published 7 February 2006.

PARTIES

British United Provident Association (BUPA) operates health insurance funds and the provision of healthcare facilities, including 252 care homes (with 17,700 beds) in the UK. Its annual turnover in the year ended 31 December 2004 was £3.6 billion.

ANS 2003 plc (ANS) was the holding company of a group of companies operating (prior to the acquisition) 44 care homes (with a total of 3,124 beds) in the UK. ANS' turnover in the year ended 31 March 2005 was £83.3 million.

TRANSACTION

BUPA acquired the whole of the issued share capital of ANS on 5 August 2005.

The extended statutory deadline for consideration of this transaction expires on 20 January 2006 and the OFT's administrative deadline expires on 10 January 2006.

JURISDICTION

As a result of this transaction BUPA and ANS have ceased to be distinct. The UK turnover of ANS exceeds £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 a relevant merger situation has been created.

THIRD PARTY VIEWS

Third parties were in general unconcerned by this merger. A small number of local authorities expressed concerns about consolidation.

ASSESSMENT

The parties overlap in the local supply of nursing and residential care home services, with the most significant overlaps occurring in the nursing care home sector. While there are a few local areas where, on the narrowest product frame of reference, the parties' post-merger shares of supply are around 50 per cent, the analysis suggests that in the areas of overlap there remains a sufficient degree of buyer power, and that the threat of new entry is considered to constrain the parties post-merger.

In terms of entry, there is evidence that national care home providers are currently developing new care homes. Also, homes currently providing residential care could re-register to offer nursing care. Moreover, a number of local authorities, including Reading, have relied on block contracts to encourage new entry.

There is evidence to suggest that the local funding authorities that finance around two thirds of all care fees will, post-merger, continue to have countervailing buyer power. The budgetary constraints local funding authorities face mean that many apply uniform charges which, first, leaves care homes little room for price increases and, second, appears to often result in a policy whereby a new resident is only placed in a home once a place has become available.

Third parties were generally unconcerned by the merger.

Consequently, the OFT does not believe that it is or may be the case that the merger has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 22(1) of the Act.

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