Legal clarity dawns for iSOFT-Torex merger

Final clearance of the merger between iSOFT and Torex edged closer today as legal issues surrounding the case were clarified.

At first sight there was a set-back to the merger as the Court of Appeal dismissed a plea by the Office of Fair Trading (OFT) against the Competition Appeal Tribunal (CAT) ruling that it had been incorrect to allow the merger to proceed.

However, the Court of Appeal provided revised guidance on how the OFT should review mergers.   Crucially the court also accepted a submission from the OFT, iSOFT and Torex that the tribunal was wrong in its interpretation of the test for referring mergers to the Competition Commission.
 
The OFT cleared the merger in November 2003 without referring it to the Competition Commission. This decision was appealed to the CAT after complaints from rival Australian software developer IBA.

Following clarification of the hurdles that need to be overcome to clear the merger, the OFT can now decide whether to clear it again or refer it to the Competition Commission.  A new ruling from the OFT on the merger is expected shortly.

A spokesperson for iSOFT told E-Health Insider the Court of Appeal’s decision meant the tribunal was wrong to set the bar for judicial review of merger decisions so low. "We now have clarification on how the OFT should review mergers."  

The spokesperson said of the Court of Appeal decision: "This puts us back to where we were before the tribunal’s decision in December." 

The merger between iSOFT and Torex was completed by their respective boards in December 2003, but the two firms have not yet begun integration pending final clearance from the competition authorities.

The OFT welcomed today’s judgment by the Court of Appeal.  In a statement the OFT said: "It provides a good basis for the OFT’s role in the UK merger assessment from now on."