UK Appeals Court Ruling Restores OFT Powers

by Robin Pilgrim, LawAndTax-News.com, London

23 February 2004

The UK's Office of Fair Trading has welcomed a ruling delivered by the Court of Appeals on Thursday which effectively overturns an earlier ruling by the Competition Appeals Tribunal (CAT), and restores certain powers to the OFT.

Ruling last year, the CAT created confusion by ordering the OFT to impose a two-pronged test on all proposed mergers, first examining whether a deal would result in a lessening of competition, and secondly whether the Competition Commission could take a different view of the matter.

Industry observers warned that this would substantially restrict the OFT's discretion over whether to refer cases, meaning that merger and acquisition activity in the UK could be slowed as a result.

The dispute centered over the merger of hospital software firms, iSoft and Torex. The merger was challenged by Australian software developer and Torex client IBA, which felt that Torex would not be committed to marketing its products following its amalgamation with iSoft, but would instead push iSoft products.

Ruling last week, the UK appeals court suggested that the Competition Appeals Tribunal had misunderstood the new Enterprise Act. However, it also suggested that the OFT had not provided sufficient justification for its decision not to refer the iSoft-Torex merger, meaning that it must now re-examine the deal.

In a statement, the Office of Fair Trading welcomed the decision, observing that:

"It provides a good basis for the OFT's role in the UK merger assessment from now on."

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