CMA Approves Care Home Disposals Following Welltower and Apex Investigation
The Competition and Markets Authority (CMA) has accepted a package of remedies proposed by Welltower and Apex Healthcare Properties, bringing its investigation into a series of care home acquisitions to a close.
The regulator’s decision follows a nine-month review of transactions involving more than 600 care homes across the UK. The CMA had identified potential competition concerns in 30 local care home markets across England and Scotland.
The remedies involve the disposal of a number of care homes and changes to their operators. The CMA said the measures address the competition concerns it identified and mean the transactions will not proceed to a more detailed Phase 2 merger investigation.
The investigation covered acquisitions involving major care providers including Barchester Healthcare, HC-One, Aria Care and Danforth Care.
CMA identifies competition concerns
The CMA began its investigation in January and concluded in May that the transactions could result in a substantial lessening of competition in a number of local markets unless action was taken.
Its concerns related to both residential and nursing care for older people, including competition between individual care homes and, in some locations, competition between care home operators.
Welltower and Apex subsequently offered a package of undertakings designed to resolve the regulator’s concerns.
Following a consultation on the proposals, the CMA has now formally accepted the remedies.
Four buyers named
The CMA’s decision identifies four organisations that will acquire or take over the operation of the care homes being divested.
They are Care UK, The Orders of St John Care Trust, Healthcare Ireland and CGEN Care Group, the parent company of Stow Healthcare.
CGEN Care Group is set to acquire five homes: Albany Lodge Nursing Home, Kentford Manor, Fieldway Care Home, Orchard Care Centre and Drummohr Nursing Home.
Healthcare Ireland will acquire Annfield House, Charters Court Nursing and Residential Home and Forthbank Nursing Home. It will also take over the operation of Tranent Care Home, Cairnie Lodge, Fosse Way View and Mossdale Residence.
Care UK will acquire Highmarket House, while The Orders of St John Care Trust will acquire Kings Court.
The CMA said the remedies provide sufficient safeguards to address the competition issues identified during its investigation.
Third-party concerns considered
The regulator’s consultation on the proposed undertakings took place in July, with the CMA subsequently extending its consideration period while it assessed responses and finalised the arrangements.
Four third parties responded to the consultation, raising issues including the independence of Care UK and Healthcare Ireland from Welltower, Healthcare Ireland’s other acquisition activity, arrangements for transferring operations and CGEN’s ability to manage a geographically dispersed portfolio following its expansion into the UK through Stow Healthcare.
The CMA said it had considered those representations but concluded that they did not change its assessment that the proposed remedies would adequately address the competition concerns.
Major transaction under scrutiny
The investigation represents a significant competition review of activity involving the UK care home sector, which has seen substantial investment from international property investors in recent years.
Alongside the principal transactions, the CMA also considered whether aspects of the arrangements created relevant merger situations involving Care UK and Aria Care, and Apex and HC-One.
The acceptance of the undertakings brings the CMA’s Phase 1 investigation to an end, with the agreed disposals and operator changes forming the basis of the remedies accepted by the regulator.
