Welltower care home merger: what the CMA's proposed remedies mean for care home providers
Following the Competition and Markets Authority's (CMA) previous investigation into Welltower Inc's acquisition of 649 UK care homes, the department has launched a consultation on its proposed decision to accept the remedy package proposed by Welltower and Apex Healthcare Properties LLC (Apex) in response to the authority's competition concerns.
These remedies provide an important insight into how the CMA approaches mergers in local service sectors, including care homes, dental practices, GP surgeries, nurseries and veterinary practices, and serve as a reminder of the risks businesses can face when competition law considerations are not fully assessed before a transaction completes.
Our competition law experts have examined the CMA’s proposed remedies, what they mean for Welltower and Apex, and what it signals to care home operators, investors and acquirers.
Perhaps the most striking feature of the proposed remedy package in the Welltower merger is its relatively limited scope. Although the CMA provisionally identified competition concerns in 30 local areas, the remedies directly affect only a small proportion of the 649 care homes acquired.
Of the 649 care homes acquired by Welltower:
10 care homes will be divested as going concerns;
6 care homes will be subject to operator reallocation, with Apex agreeing not to return as operator for a period of 10 years; and
Up to 8 additional care homes have been identified for disposal if certain conditions are not met (i.e. if landlord consent for lease assignment not granted or if a care home does not return to council operation).
Some of these categories overlap, meaning the number of affected care homes is lower than a simple total of the figures above would suggest.
To facilitate implementation, Welltower has identified CMA-approved upfront purchasers for the divestment package:
CGEN Care Group Limited (trading as Stow Healthcare) will acquire five care homes.
Healthcare Ireland Group will acquire three care homes and assume operation of a further four.
Care UK Care Services Limited will acquire one care home.
Orders of St John Care Trust will acquire one care home.
Under the proposed undertakings, Welltower will be required to:
complete the divestments within three months of the CMA accepting the undertakings;
obtain all necessary CQC (or equivalent regulatory) approvals before completing the divestments; and
maintain a clear separation between Welltower and the divested businesses for 10 years, including separation of assets, personnel and commercially sensitive information.
In addition, Apex will be prohibited from operating or managing the reallocated care homes for 10 years following the operator changes.
While the consultation remains ongoing, the published undertakings suggest that Welltower and Apex are likely to avoid a Phase 2 investigation. The CMA has already stated that it considers the proposed remedy package capable of addressing its concerns, and the identification of upfront buyers significantly increases the prospects of the undertakings being accepted.
The update also provides an interesting indication of the CMA's assessment of competitive harm. Despite concerns arising in relation to a portfolio of 649 care homes, only a relatively small number of assets are expected to be subject to divestment or operator changes. On one view, this demonstrates the CMA's willingness to apply targeted remedies where competition concerns are confined to particular local markets, rather than requiring wider structural changes to a transaction.
That said, the consequences for the parties should not be understated. Divesting care homes as going concerns, appointing replacement operators and securing the necessary regulatory approvals can involve significant costs, management time and operational complexity. This does not even account for the burden of complying with the CMA's hold separate requirements throughout the investigation, which can prevent full integration of the acquired businesses pending the CMA's review.
The case also highlights the risks of completing acquisitions before fully assessing potential merger control issues. Earlier engagement with the CMA may have avoided some of the costs, delays and disruption associated with post-completion remedies. For investors and operators in local markets (such as care homes, veterinary practices, nurseries, dental practices and GP surgeries), competition law analysis and regulatory approval requirements should form a central part of transaction planning from the outset.
The CMA has the ability to investigate completed transactions for up to four months from the latter of either the date of completion or whenever material facts relating to the transaction are made public. If concerns are identified after completion, this can result in divestments, changes to operating arrangements and lengthy behavioural commitments.
While the proposed remedies affect only a small proportion of the 649 care homes acquired, they nevertheless demonstrate how merger control intervention can alter the structure and economics of a transaction long after a deal has completed.
The CMA is proposing to accept the undertakings in lieu of referring the transaction for a Phase 2 investigation. Interested parties have until 14 August 2026 to submit comments on the proposed undertakings. The CMA will consider all representations received and may amend the proposals where appropriate. If material changes are required, the CMA will conduct a further consultation before any undertakings are finalised.
FAQs
What is a CMA merger remedy?
A CMA merger remedy is a measure designed to address competition concerns identified by the CMA following a merger or acquisition. Remedies can include divestments, operational changes or behavioural commitments intended to preserve competition and consumer choice.
Where concerns are identified at Phase 1, merging parties will often seek to offer Undertakings in Lieu (UILs) to address the CMA's concerns and avoid a Phase 2 reference. This can be a critical step, as a Phase 2 investigation is considerably more detailed, time-consuming and expensive, and may ultimately result in more extensive remedies being required.
Why did the CMA investigate the Welltower care home acquisition?
The Competition and Markets Authority (CMA) investigated Welltower’s acquisitions on the grounds that ownership concentration and overlaps across more than 600 UK care homes could create a substantial lessening of competition (SLC) in specific local catchment areas, leading to higher fees or reduced quality of care.
Rather than evaluating a single national market, the CMA assessed elderly residential and nursing care as hyper-local markets, flagging competition concerns in 30 distinct local areas across England and Scotland where the combined entities or property control exceeded a local threshold (such as a 35% local bed capacity concentration)
Can the CMA investigate a completed acquisition?
Yes. Unlike most jurisdictions, the UK merger control regime is voluntary, meaning that transactions complete without any prior CMA approval. However, the CMA has the power to investigate completed acquisitions where it believes a transaction could result in a substantial lessening of competition and can do so within four months of the latter or either completion or the date on which material facts about the transaction were made public.
Businesses should therefore assess merger control risk carefully before completion, particularly where a transaction may raise local or national competition concerns.
Which sectors are most likely to face local market merger scrutiny?
Local market assessments are most common in sectors where customers typically choose providers within a limited geographic area. Examples include care homes, veterinary practices, dental practices, GP surgeries, childcare and nursery services, self-storage facilities, and certain retail and healthcare businesses. The CMA will often examine competition at a local level rather than across the UK as a whole.
What happens if the CMA finds competition concerns after completion?
Where the CMA identifies competition concerns in a completed transaction, it may require remedies to restore competition. These can include divestments, operational changes or behavioural commitments. The CMA will also invariably impose hold separate obligations during its investigation, preventing the parties from fully integrating their businesses until the review is concluded.
How can businesses reduce the risk of CMA intervention?
Early merger control analysis can help businesses identify potential competition concerns, assess CMA jurisdictional risks, and determine whether engagement with the regulator may be advisable. Taking advice at an early stage can help avoid costly delays, minimise disruption and reduce the risk of post-completion investigations or remedies.Early merger control analysis can help businesses identify potential CMA concerns, avoid costly delays and reduce the risk of post-completion remedies.
Our Competition team advises businesses across a range of regulated sectors on merger control, CMA investigations and competition law compliance. Get in touch for more information.
