UK competition watchdog plans probe into veterinary market

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The UK competition watchdog plans to launch an investigation into the veterinary market, warning that an industry that has consolidated rapidly over the past decade may be short-changing millions of pet owners.

Announcing the plan on Tuesday, the Competition and Markets Authority said 16mn pet owners may be overpaying for medicines and prescriptions.

Regulators are taking aim at an industry whose growth has attracted investment from some of the world’s largest private equity firms, including CVC, EQT and Silver Lake. Almost 60 per cent of veterinary practices are owned by large companies, up from 10 per cent in 2013, the CMA said.

The decision to deepen its investigation comes six months after the watchdog opened an initial probe into an industry whose expansion was turbocharged during the pandemic as locked-down consumers bought pets.

“Our review has identified multiple concerns with the market that we think should be investigated further,” said CMA chief executive Sarah Cardell.

“These include pet owners finding it difficult to access basic information like price lists and prescription costs — and potentially overpaying for medicines. We are also concerned about weak competition in some areas, driven in part by sector consolidation.”

Its initial inquiry received an “unprecedented” 56,000 responses, including 45,000 from members of the public, the CMA said.

In a sign of the pace of consolidation, the regulator said that since 2013 six large operators — CVS Group, IVC Evidensia, Pets at Home, VetPartners, Medivet and Linnaeus — have bought 1,500 of the UK’s 5,000 practices.

The intervention by the CMA sent shares in CVS, one of the UK’s biggest veterinary chains, plunging 28 per cent on Tuesday. Shares in Pets at Home, a retailer of pet products that also provides veterinary services, fell 4 per cent.

IVC Evidensia is owned by Swedish buyout firm EQT and Silicon Valley investor Silver Lake, VetPartners is owned by BC Partners and Medivet is controlled by CVC Capital Partners.

The CMA said a formal investigation hands it powers to intervene in several ways, including requiring consumers to be given more information, imposing caps on fees and ordering the sale of businesses.

“A CMA market investigation is a big risk for the companies operating in a sector,” said Tom Smith, competition lawyer at Geradin Partners and former CMA legal director. “The CMA would need to show why this is a problem for competition before having the power to break up these groups.”

Alongside the risk of overpaying for services, the CMA flagged concerns over pet owners facing a lack of information when shopping around for treatment and an outdated regulatory framework for the sector that dates back to 1966.

About a quarter of pet owners did not know they could potentially save money by getting prescriptions filled at places other than their vet surgery, the watchdog said.

The CMA has started a four-week consultation on its proposal to open a formal investigation, after which the regulator will decide how to proceed.

CVS said it had “engaged constructively” with the CMA and that it had put forward remedies that could be adopted industry-wide that would address the regulator’s concerns “more quickly than an 18-month investigation”.

Pets at Home said it was “disappointed” by the CMA’s findings and that its vets had “clinical and operational freedom” to choose their own pricing and services. IVC said the industry’s costs had been driven up by inflation and a shortage of qualified vets. VetPartners, Medivet and Linneaus were contacted for comment.

The intervention by the CMA follows scrutiny of the veterinary market in the US, where the Federal Trade Commission in 2022 required buyout firm JAB to sell some clinics. Last October, FTC chair Lina Khan appealed directly to a conference of vets to report any uncompetitive behaviour.

The US veterinary market has also consolidated over the past decade. Mars has acquired a string of vet groups, beginning with the $9.1bn acquisition of vet chain VCA in 2017 while JAB has also purchased two groups.