UK competition watchdog plans probe into veterinary market. Is the US next?
In a bid to address mounting concerns of potential exploitation within the veterinary market, the UK Competition and Markets Authority (CMA) has announced plans to launch a comprehensive investigation. The move follows a rapid consolidation within the industry over the past decade, which may have left millions of pet owners at a disadvantage.
Highlighted in the announcement on Tuesday, the CMA raised alarms over potential overpricing of medicines and prescriptions, affecting an estimated 16 million pet owners across the UK. The surge in consolidation, with nearly 60% of veterinary practices now owned by large corporations compared to just 10% in 2013, has attracted significant investment from global private equity firms such as CVC, EQT, and Silver Lake.
CMA Chief Executive Sarah Cardell emphasized the need for a thorough investigation, citing concerns over limited access to essential information like pricing details and prescription costs for pet owners. The watchdog's initial inquiry garnered an unprecedented 56,000 responses, indicating widespread public interest and apprehension.
The pace of consolidation within the industry has been staggering, with six major operators acquiring 1,500 of the UK's 5,000 practices since 2013. Shares in leading veterinary chains, including CVS Group and Pets at Home, experienced significant declines following the CMA's announcement.
With formal investigation powers at its disposal, the CMA aims to intervene by enhancing consumer information, imposing fee caps, and potentially mandating business divestitures. However, the prospect of regulatory intervention poses substantial risks for companies operating in the sector, raising questions about the need for enhanced competition and consumer protection measures.
Concerns extend beyond pricing disparities, encompassing issues such as insufficient information availability and an outdated regulatory framework dating back to 1966. A quarter of pet owners remain unaware of potential cost savings by obtaining prescriptions from alternative sources, indicating a lack of transparency within the market.
As the CMA initiates a four-week consultation on its proposal for a formal investigation, stakeholders, including CVS and Pets at Home, have expressed willingness to engage constructively. Nevertheless, the CMA's intervention underscores the urgency of addressing systemic issues to ensure fair competition and consumer welfare within the veterinary market.
Read full article: https://www.ft.com/content/7a12bb87-ba9e-4a8d-9262-0789813492d1
