OFT overruled on medical software deal

The merger of the medical software companies iSoft and Torex was thrown into confusion yesterday when the Office of Fair Trading's decision to clear the deal was overturned on appeal.

The new Competition Commission Appeal Tribunal ruled that the OFT's decision-makingfailed to consider the full implications of the merger. It represents an important first victory for IBA, the Australian software company that is challenging the merger, which it says will mean Torex, its distributor in the UK, does not promote its software aggressively.

The £740m merger would create one of the biggest suppliers of software to the NHS.

Lawyers for both UK companies and the OFT were still studying the ruling last night, and the OFT could appeal. It is possible the judgment could limit the scope of the OFT's recently acquired powers to adjudicate on mergers and acquisitions. Sir Christopher Bellamy, the president of the tribunal, said the OFT had failed to apply a crucial test, namely whether the Competition Commission could have come up with a different ruling. He ordered the OFT to reconsider.

Sir Christopher added: "In a merger case where it is clear there are material and complex issues relating to what is potentially a lessening of competition between horizontal sectors in a sector of national importance, we do not think it likely that Parliament intended those issues were to be resolved at the stage of the OFT."

The decision not to refer iSoft/Torex to the Competition Commission was the first of the OFT's rulings to be appealed.