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Monday 19 August 2019

Watchdog halts tech merger over fears of price rises for NHS and charities

The CMA has called for the break-up of recently merged Tobii and Smartbox after ruling the deal will reduce competition.

Tobii eye tracker (Tobii/PA)
Tobii eye tracker (Tobii/PA)

By Henry Saker-Clark, PA City Reporter

The competition watchdog has called for the break-up of two recently-merged medical technology firms after finding the deal could lead to the NHS and charities paying higher prices.

Sweden-based Tobii bought UK rival Smartbox for £11 million last year, but the Competition and Markets Authority (CMA) has now ordered Tobii to sell off the business.

The announcement comes after an investigation by independent CMA panel members concluded that the tie-up could result in a reduction in “quality, less new product development, and higher prices”.

The technology firms both produce specialised software and devices which help people with complex speech and language needs to communicate.

These products are typically bought by the NHS, charities and schools to help people with disabilities.

The watchdog warned that this means the loss of competition brought about by the deal “could have very serious effects”.

The CMA decided that the “only effective way” of addressing the loss of competition from the merger would be for Tobii to sell Smartbox to a new owner, it said.

Initial fears over the merger were raised by the CMA in January, as it demanded solutions from the two companies to mitigate its concerns.

But the regulator later said the firms had failed to assuage its fears, resulting in a further investigation.

Having carefully considered all options, we decided that only selling the entire Smartbox business would effectively address the concerns we found Kip Meek

Kip Meek, chairman of the independent inquiry group carrying out the probe, said: “Competition plays a key role in driving improvements in product range and quality – making a real difference for the people who use these technologies to communicate.

“Competitive pricing also helps to make sure that public bodies aren’t paying more than they should for these technologies.

“Having carefully considered all options, we decided that only selling the entire Smartbox business would effectively address the concerns we found.”

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