A competition watchdog has been asked to investigate whether a plan to set up a so-called NHS pay cartel in the region is illegal.
A total of 20 NHS organisations have joined the South West Pay Consortium (SWC) which aims to examine future financial challenges.
However St Austell and Newquay MP Stephen Gilbert has called on the Office for Fair Trading (OFT) to launch an inquiry.
The Liberal Democrat MP, who is focused on the Royal Cornwall Hospital Trust's (RCHT) membership of the SWC, said he believed that the organisation could well be acting illegally by signing up.
He said: "The Royal Cornwall Hospital NHS Trust and the other health trusts across the south west in this cartel wants to have their cake and eat it.
"The so-called 'consortium' is hiding behind the NHS badge while riding roughshod over national NHS pay and conditions.
"They are claiming rights as autonomous, independent providers but they are then colluding together as a cartel to fix terms and conditions and their wage costs.
"I believe that this is a potentially illegal cartel and I have asked the OFT to investigate whether what these trusts are doing is within the rules of the NHS."
The SWC, which includes hospital in Exeter, Taunton and Plymouth as well as other NHS trusts, has not released any firm proposals as yet.
Earlier this year, SWC "scoping" documents suggested a number of "staff cost reduction potential opportunities".
These included asking people to work extra hours for no extra pay, reducing unsocial hours allowances and reducing sick pay for new starters.
Unions from across the health spectrum have condemned the thrust of the SWC's work, saying it is an excuse to ditch hard fought pay agreements and drive down pay and conditions.
A spokesman for the SWC refused to comment on Mr Gilbert's call.
An RCHT spokesman also refused to comment specifically on Mr Gilbert's actions, but added: "Like all NHS Trusts across the UK, RCHT faces serious financial and operational challenges, both now and in the future. In considering how we can maintain high quality services and protect employment we have to look at every area where we may be able to make efficiencies."
A spokesman for the OFT said they would consider all submissions.
