The competition watchdog said it was protecting customers and the NHS on Thursday as it blocked part of the planned tie-up between two hearing implant companies.

The Competition and Markets Authority (CMA) said that it would not allow the merger of Cochlear Limited and Oticon Medical to go ahead.

Cochlear agreed to buy Oticon Medical from Danish company Demant in April last year, paying 850 million Danish krone (£98 million) for the business.

But the CMA found that the proposed deal could lead to a “substantial lessening” in competition in bone conduction solution (BCS) products.

The combined company would control more than 90% of the UK market and new players would be unlikely to pose any major competition threat to Cochlear should the deal proceed.

This could lead to patients being faced with less choice, worse quality products or less innovation when choosing a hearing implant.

It might also increase costs for the NHS, which is the main buyer of these hearing implants in the UK.

“Our primary concern is the well-being of patients. We found that the full merger could reduce innovation and quality and potentially cost the NHS more through higher prices,” said Kip Meek, chair of the independent panel of experts conducting this investigation.

“We’re pleased to find a solution which not only addresses these competition concerns but is also less onerous than preventing the merger entirely.”

The CMA said it would not block another part of the takeover, after it investigated the cochlear implants business but found there were no competition concerns.

Cochlear can therefore still buy the Danish company’s cochlear implants unit if it wishes.