The UK's Competition and Markets Authority (CMA) is consulting on whether to launch a formal Market Investigation into the veterinary services market for household pets in the UK, amid concerns that millions of pet owners may be overpaying for services and lack sufficient information to make informed choices. The move follows an initial review into the rapidly consolidating industry (which is estimated to be worth more than 2 billion pounds and saw significant expansion during the pandemic), the provisional findings of which identified multiple concerns with the market that the CMA believe require further investigation. See our article on the initial CMA market review into the veterinary services market here.

CMA’s Key Concerns

The CMA announced its provisional decision to launch a formal Market Investigation after finding numerous potential issues within the market, including the lack of transparency and accessibility of basic information like price lists and prescription costs. Concerns were also raised around weak competition in certain areas, driven partly by the swift consolidation of the sector. Approximately 60% of vet practices are now owned by large companies, a significant increase from 10% in 2013.

Furthermore, the existing regulation in the veterinary industry, dating back to 1966, predominantly focuses on individual practitioners rather than the veterinary practices as businesses or their owners. This antiquated framework limits the statutory regulator, the Royal College of Veterinary Surgeons (RCVS), in overseeing commercial and consumer-related aspects such as price communication and ownership transparency. To address this, the RCVS introduced a voluntary Practice Standards Scheme, which targets vet practices instead of individual vets. However, only 69% of eligible practices have opted into this scheme, leaving nearly a third of the market uncommitted.

Consultation and Next Steps

The CMA’s initial review into the industry back in September 2023 drew an "unprecedented" 56,000 responses, including 45,000 from members of the public. The CMA has now started a four-week consultation on its proposal to open a formal investigation, which will close on 11 April 2024, after which it will decide how to proceed.

A Market Investigation enables the CMA to intervene directly in markets if it finds that competition is being adversely affected. The CMA can compel individuals and businesses under investigation to provide information and can order potential remedies which might include requiring consumers to be provided with more information, imposing caps on fees (such as prescription fees), and even ordering the sale of businesses. However, for such interventions to be made, the CMA will have to demonstrate why these issues are problematic for competition.

Responses by some of the businesses involved following the initial review in September have, to date, included a willingness to implement possible remedies including increasing transparency around the ownership of First Opinion Practices (FOPs), providing treatment price lists, and making clear the option to buy prescriptions elsewhere. However, the CMA commented in its consultation document that there is a “considerable gap” between its provisional concerns and the proposed remedies. 

This move by the CMA mirrors recent scrutiny of the veterinary market in the US, where the Federal Trade Commission required buyout firm JAB to sell some of its clinics in 2022 to promote competition.

How We Can Help

Our UK competition team understand the intricacies of competition law and have considerable experience, having worked at competition authorities such as the CMA, which enables them to truly understand the way in which the CMA operates and the types of considerations that drive its decisions. This deep understanding translates to strategic advice for businesses navigating complex competition-related issues. Our sector-focused approach in this area is bolstered by our pet sector working group, ensuring that our specialised lawyers stay on the cutting edge of trends in the pet industry and regulations affecting it. This unique combination of legal expertise and industry knowledge positions Bird & Bird as a valuable partner for businesses looking to navigate competition and other issues in the ever-evolving retail and consumer landscape. 

If you need more information or further guidance in this area, please contact Dr. Saskia King, Pieter Erasmus, Graeme Payne, Shelley Nadler.

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