The Competition and Market Authority (CMA) has provisionally found that remedies including the sale of HCA hospitals would not be 'proportionate' to improve competition in the London private health market.
In its latest investigation into the private healthcare market, the CMA said that likely changes including the entry of the Cleveland Clinic into the London market would increase competition.
The CMA said that none of the additional remedies previously mooted would be "effective and proportionate."
It had consulted on possible remedies to address concerns that hospital group HCA was having an adverse impact on competition in the private healthcare market.
The CMA had suggested the divestment of one or more hospital(s) by HCA, HCA allowing competitors access to one or more of its hospital(s) or the prevention of further expansion by HCA in central London.
Following the initial review, HCA launched a legal challenge based on identified errors in the CMA's insured pricing analysis and appealed to the Competition Appeal Tribunal (CAT).
This was sent back to the CMA in January 2015 to reconsider.
However, in its latest report the CMA has now u-turned on these remedies due to likely changes in the London private healthcare market.
One factor was the entry of a new hospital Cleveland Clinic into the private healthcare market by 2020.
The report expects that Cleveland Clinic will, together with the other existing operators in central London,"effectively constrain HCA" potentially by early 2022.
Bupa warned that private health customers would be "penalised" by HCA pricing over the next six years and urged the regulator to "take action now."
The CMA is inviting views in writing on this provisional decision by 5pm on 13 April 2016.
Roger Witcomb, chairman of the Private Healthcare Market Remittal Group, said the review had "heard a great deal of new evidence."
He said: "In our final report in the original investigation and again in our provisional findings on the remittal, we identified that customers of privately-funded healthcare in central London were paying too much, largely because of HCA's strong market position. In our original investigation, we sought to address that problem by requiring HCA to sell one or two of its central London hospitals.
"We still believe the market requires more competition, but the new information we have received in the course of the remittal means that we now believe that divestment is no longer a proportionate remedy."
He added: "This new information has included evidence of probable entry into the central London market, which we consider will provide a competitive constraint on HCA in this market within the next 4-6 years.
"This means that benefits to consumers of a divestment would be short-lived and not large enough to outweigh the cost of divestment, and we have found no other remedy which is both effective and proportionate.
"This was a finely balanced decision, and the group was not unanimous. We will of course consider responses to this provisional decision before making a final decision on remedies."
A HCA spokesman said: "HCA welcomes the CMA's recognition that the competitive landscape in London will continue to evolve and we will engage with the CMA for the remainder of the consultation process."
Further reading
CMA eases demands on hospital groups in private healthcare review
Hospital groups furious at CC announcement
