Competition Appeal puts brakes on iSOFT/Torex merger

The immediate future of the proposed iSOFT-Torex merger was thrown into question today when the Competition Appeals Tribunal ruled that the Office of Fair Trading was incorrect in its 7 November decision to allow the merger to proceed.

 

In its review – the first of its kind – the Competition Appeals Tribunal ruled that the OFT had failed to conduct a proper investigation and had failed to adopt a “reasonable” decision.

 

The decision is likely to see the proposed merger now referred back to the OFT.

 

In a complex ruling the Competitions Appeal Tribunal concluded: “Applying the principals of judicial review appropriate to this case, in our judgement the contested decision was erroneous in point of law and/or was not a decision which it was reasonably open to the OFT to take on in consideration of the [The Enterprise Act, 2002] Act.”

 

The tribunal continued: “… we consider that the OFT was faced with a real issue as to whether there was a substantial lessening of competition as a result of the iSOFT/Torex merger.”

 

Gary Cohen, chairman of IBA Health, the Australian-based company that pressed for the review, told E-Health Insider: “It’s a great decision for competition in the UK, the healthcare IT industry in general and IBA in particular. I believe that the OFT will now have to refer the case to the Competition Commission.”

 

He added that he believed the Competition Appeals Tribunal ruling “raised significant doubts about the future of the merger”.

 

In a statement IBA Health said: “IBA will continue to press ahead with a series of measures against the merger.” The company have already served notice against Torex Chairman, Chris Moore, for alleged breach of his fiduciary duties whilst serving as an IBA director.

 

A spokesman for iSOFT said the impact the judgement might have on the merger was unclear.  “There’s no precedent for this process so it’s difficult to judge how long the appeal process will take.  It’s not for iSOFT to appeal – it’s the OFT.  We are talking to them about that today.”

 

He said that the tribunal’s judgement would not impact on iSOFT’s ability to win work under the National Programme for IT in the NHS. “iSOFT is well positioned as far as the bid process is concerned, but there are benefits to having Torex in the mix as far as the lifetime of the contracts is concerned.”

 

A lot of time had been invested in the original merger process, said the spokesman.  “It’s just disappointing that this could be allowed to happen,” he commented.

 

Previously:

 

 

 

 

The full text of the ruling can be found at: