A planned merger of two hearing implant specialists risks ramping up prices for the NHS and stifling innovation, the competition watchdog warned on Tuesday.
Australia’s Cochlear agreed to buy Oticon Medical, the loss-making hearing division of Denmark’s Demant, in April. The two companies make cochlear implants and bone conduction solutions, which are surgically-implanted hearing devices for people with mild to total hearing loss.
At the time, Cochlear said the acquisition – which is expected to add around AUS$75m-80m (£41m-£44m) to annual revenues – would allow it to “increase our investments in research and development and market growth activities”.
Following a phase 1 investigation, however, the Competition and Markets Authority said on Tuesday that the deal would leave the merged business with a 90%-100% share of the bone conduction solutions market in the UK, potentially leading to “reduced innovation, higher prices or less choice for hospitals and their prices” as a result.
Sorcha O’Carroll, CMA senior director of mergers, added: “We’re concerned that this deal could lead to higher costs for the NHS and worse outcomes for patients who rely on life changing hearing implants. The merger will wipe out one of the main suppliers, and leave Cochlear with a near monopoly in the supply of bone conduction implants.”
Demant has previously said it wants to discontinue its UK hearing implants business, and would therefore no longer compete with Cochlear even if the merger did not go ahead.
The CMA, however, said it was “not convinced” that Demant would exit the business without the merger.
The two companies now have until 13 December to address the CMA’s concerns through the offer of undertakings. The deal will be referred to a more in-depth phase 2 probe if they are not addressed to the regulator’s satisfaction.
Cochlear was not immediately available for comment.
