The Competition and Markets Authority (CMA) has published phase one of its investigation into four completed acquisitions of care home operators by Welltower Inc.

The regulator’s inquiry relates to more than 600 properties combined managed by Barchester Healthcare, HC-One, Aria Care (including Asprey) and Danforth Care.

It concludes that the transactions raise a “realistic prospect” of a substantial lessening of competition in a number of local markets and indicated the deals will move to an in-depth phase two investigation unless acceptable remedies are offered.

Vicky Tomlinson, Partner and corporate health lead at UK and Ireland law firm Browne Jacobson, said: “The CMA’s latest decision on Welltower marks a significant moment for the UK adult social care sector.

“What is particularly notable is the CMA’s focus not only on care operators themselves, but on the influence that institutional investors and property owners can exert over operational strategy, pricing, investment decisions and competitive dynamics. This reflects a wider shift in regulatory thinking.

“The independent health and care sector has become increasingly important to institutional capital, infrastructure investors and global real estate funds. With that importance comes greater scrutiny with the UK regulator. Regulators are looking more closely at how ownership structures, operational alignment and market concentration may affect competition, resident choice and quality of care at a local level.

“For providers, investors and lenders alike, this is about more than one transaction and signals the CMA’s ability to intervene and investigate in consolidation across health and care markets at a local level. It signals a more interventionist approach from the CMA towards consolidation across health and care markets.

“At the same time, the sector continues to need significant investment, innovation and modernisation to meet rising demand and increasing complexity of care needs. The challenge will be ensuring appropriate regulatory oversight without creating unintended barriers to the capital the sector needs to grow and evolve sustainably.

“This is an important development for everyone involved in health and care transactions — and one the sector will be watching closely over the coming months.”