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The UK competition regulator is pressing ahead with a full investigation of the veterinary sector, which could result in the break-up or sale of businesses to make the market more competitive.
The UK Competition and Markets Authority said on Thursday that it was opening the probe over concerns about high prices and a lack of choice for pet owners. Beyond breaking up the dominant groups in the market, which is estimated to be worth about £5bn a year, the CMA could impose maximum prescription fees or demand certain information be provided to customers.
The decision to launch a full investigation comes after the CMA received an unprecedented response following an initial review and a call for evidence in September — 56,000 pet owners and sector workers wrote to the agency. Regulators are taking aim at an industry whose growth has attracted investment from some of the world’s largest private equity firms, including CVC Capital Partners, EQT and Silver Lake.
The CMA said in March that almost 60 per cent of veterinary practices were owned by large companies, up from 10 per cent in 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.
“[We] remain concerned about the potential impact of sector consolidation and the incentives for large, integrated vet groups to act in ways which reduce consumer choice,” Sarah Cardell, chief executive of the CMA, said in a statement.
“We’ve heard from people who are struggling to pay vet bills, potentially overpaying for medicines and don’t always know the best treatment options available to them.”
Cardell added that while the regulator was aware of the “acute staff shortages and difficult working conditions” in the sector, the watchdog felt that a full market probe was necessary.
The CMA has appointed an independent group of investigators to conduct the probe, which must conclude within 18 months, save exceptional circumstances.
The regulator has sweeping powers to intervene directly in a sector as part of such a probe and can demand the break-up of businesses or change the way products and services are sold.
The group will look at how limited choice in vet providers is affecting consumers in some areas; whether profits are consistent with a competitive market; what incentives businesses have to limit consumer choice; and whether the regulatory framework, which dates back to 1966, may be affecting how the sector operates.
