In the News
Hearing Aids Merger Under CMA Investigation
As someone who has experienced hearing loss during covid, this economics news is personal. The Competition and Markets Authority are poised to deepen an investigation into the proposed merger between the UK's two leading suppliers of hearing aids including cochlear implants. This would be an example of horizontal integration since both companies manufacture hearing implant devices.
Following a Phase 1 investigation, the CMA has found that Cochlear’s proposed purchase of Oticon Medical would result in the merged businesses having a 90-100% share of the bone conduction solutions market in the UK. Little wonder that the CMA is concerned that this would result in the elimination of the strongest competitor in this segment (Oticon Medical), which could lead to reduced innovation (a loss of dynamic efficiency) higher prices (a loss of allocative efficiency) or less choice for hospitals and their patients.
Those waiting months and years for suitable treatment via the NHS will be concerned not least because hearing aid technologies made available for NHS patients tend to lag around four years behind those offered through the private sector.
This is a superb example to add to your competition policy study and revision notes. This proposed merger would lead to significant market power for the enlarged firm and the CMA is concerned that it would lead to a loss of allocative and dynamic efficiency in the market. Similar concerns have been raised by the Australian Competition Authorities - so this is a story worth watching.