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Nabarro advises HCA in CMA's u-turn in private health inquiry

5 September 2016

This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.

The Competition and Markets Authority (CMA) has concluded its inquiry into private healthcare provider HCA International, and has dropped its original decision forcing HCA to sell off two private hospital facilities in central London. The EU Competition & Trade team at Nabarro represented HCA through the inquiry.

HCA operates a number of renowned private hospitals in London, including the London Bridge Hospital and Harley Street Clinic. In 2014, the CMA published a report alleging that HCA charged higher prices than its competitors in London, and ordered HCA to divest two of its facilities to generate more competition. HCA appealed against the findings and demonstrated that the CMA had made serious errors in the way that it compared hospital prices. The Competition Appeal Tribunal quashed the decision, and ordered the CMA to carry out a fresh investigation.

The CMA has now completed its investigation, and in a new decision the CMA acknowledges that it cannot rely on its pricing analysis, and accepts that divestment would be a disproportionate remedy. The CMA has also accepted that the market is becoming increasingly competitive, and that no further intervention is required. It has therefore dropped its divestment proposals.

This is the first time that the competition regulator's attempts to order divestiture in a market investigation have been successfully challenged. It breaks new legal ground about the transparency of the CMA's market investigations. The Tribunal established that where the regulator proposed to impose draconian penalties such as divestment, it had a duty to provide full disclosure of the evidence it is relying on to allow companies to challenge it.

Leading the Nabarro team was EU Competition & Trade, Regulatory partner Cyrus Mehta who was assisted by senior associate Kabir Garyali and associate Jonathan Carter-Lewis. Jasy Loyal, HCA's Vice-President of Legal Affairs, led HCA's in-house team. KPMG's competition economics team advised on economics. In the Tribunal proceedings, Nabarro instructed Dinah Rose QC of Blackstone Chambers, Josh Holmes of Monckton Chambers, and Hanif Mussa of Blackstone Chambers.

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Cyrus Mehta