The Competition and Markets Authority (CMA) accepts Welltower and Apex Healthcare Properties sell-off proposals, ending its nine-month probe over acquisitions spanning more than 600 UK care homes.
The Competition and Markets Authority (CMA) has accepted remedial undertakings offered by Welltower and Apex Healthcare Properties, bringing to a close its phase one investigation into a series of care home acquisitions spanning more than 600 UK facilities.
The regulator has published the full text of its decision today, revealing a package of care home disposals and operator changes designed to address competition concerns identified across 30 local care home markets in England and Scotland. The measures allow Welltower to avoid a phase two merger inquiry into its acquisitions involving Barchester Healthcare, HC-One, Aria Care and Danforth Care.
The decision marks the final stage of a regulatory process that began in January and saw the CMA conclude in May that the transactions could substantially lessen competition in a number of local care home markets unless corrective action was taken.
Named buyers unveiled
The decision identifies the approved purchasers for the divested homes as Care UK, Orders of St John Care Trust, Healthcare Ireland and CGEN Care Group, the parent company of Stow Healthcare.
Under the arrangements, CGEN will acquire Albany Lodge Nursing Home, Kentford Manor, Fieldway Care Home, Orchard Care Centre and Drummohr Nursing Home.
Meanwhile Healthcare Ireland will acquire Annfield House, Charters Court Nursing and Residential Home and Forthbank Nursing Home, while also becoming operator of Tranent Care Home, Cairnie Lodge, Fosse Way View and Mossdale Residence. Care UK will acquire Highmarket House and Orders of St John Care Trust will acquire Kings Court.
End of a closely watched inquiry
The ruling follows months of scrutiny of one of the largest care home investment transactions ever examined by the competition regulator.
In May, The CMA said the mergers created a realistic prospect of a substantial lessening of competition across 30 local areas, involving both residential and nursing care services for older people. The regulator identified concerns relating both to direct competition between care homes and, in certain areas, competition between operators.
It subsequently agreed to consider remedies proposed by Welltower and Apex after concluding there were reasonable grounds to believe they could address those concerns.
A consultation on the proposed undertakings was launched in July, with the CMA later extending its consideration period while reviewing responses and finalising the package.
A consultation on the proposed undertakings was launched in July, with the CMA later extending its consideration period while reviewing responses and finalising the package. The watchdog also disclosed today that it had heard from four third parties during its consultation, raising issues including the independence of Care UK and Healthcare Ireland from Welltower, Healthcare Ireland's acquisition activity elsewhere in the market, operational transfer arrangements and the capability of CGEN to manage a geographically dispersed portfolio following its entry into the UK market through Stow Healthcare.
However, the CMA said these concerns did not alter its conclusion that the proposed remedies would adequately address competition concerns.
The transactions encompass care homes managed by some of the UK's largest providers and form part of a wider period of significant capital inflows into the sector from international real estate investors. The CMA's investigation also examined whether aspects of the arrangements created relevant merger situations involving Care UK and Aria Care, and Apex and HC-One.
