On 9 July 2024, the Competition and Markets Authority (“CMA”) published its Issues Statement, following its decision on 23 May 2024 to launch a full market investigation into the supply of veterinary services for household pets in the UK. The Issues Statement, released by the Inquiry Group, outlines the areas of investigation and the types of remedies the CMA may consider in the event it concludes there has been an ‘adverse effect on competition’ (“AEC”). It also provides a chance for the veterinary sector and other interested parties to comment on these issues and the planned approach. You can read our initial updates regarding the market investigation here and here. 

The CMA is particularly interested in understanding:

a) how consumers make decisions at different stages of purchasing veterinary services; 

b) the impact of the owner’s and/or pet’s circumstances on decision making; 

c) the information available to consumers; 

d) the incentives on veterinary professionals to facilitate consumer choice; 

e) the impact of different business models in the sector; and 

f) whether the regulatory framework is conducive to competition.

The inquiry will build on the evidence gathered during the market review and will use various sources, such as questions to veterinary businesses, site visits to relevant locations, roundtables with veterinary professionals, formal hearings, consultations on working papers and provisional findings, and potentially external research with consumers and veterinary professionals. The CMA also plans to examine the role of pet insurance and insurers in the supply of veterinary services, and how they contribute to a well-functioning market. However, the CMA will not investigate the market for the supply of pet insurance itself, as it falls outside the scope of their current inquiry.

The CMA has outlined various theories of harm to provide a focus for the investigation, which are:

1. pet owners might not engage effectively in the choice of the best veterinary practice or the right treatment for their needs due to a range of factors including a lack of appropriate information; 
2. concentrated local markets, in part driven by sector consolidation, might be leading to weak competition in some geographic areas;
3. large integrated groups might have incentives to act in ways which reduce choice and weaken competition;
4. pet owners might not engage effectively and might lack awareness of their options when a pet dies and as a result may be overpaying for cremations;
5. pet owners might be overpaying for medicines or prescriptions due to a range of factors including a lack of awareness of their options;
6. the regulatory framework is outdated and may no longer be fit for purpose and may currently be operated in a manner that does not facilitate a well-functioning market.

The Issues Statement explains that the investigation will consider outcomes such as prices, profits and levels of choice and innovation to help the CMA to determine whether there are AEC(s) and, if so, the extent of harm they might cause to customers, such as through higher prices (possibly manifested through higher profits), and reduced choice, innovation and/or quality. 

Remedies

If the Inquiry Group finds that there is an AEC, it must decide whether the CMA should take action and/or recommend for others to take action to remedy, mitigate or prevent the AEC or any detrimental effect caused, or likely to be caused, to customers as a result. 

When considering recommendations for remedial action, the CMA must aim to achieve as comprehensive a solution as is reasonable and practicable, and in doing so must consider, individually and as a package, how comprehensively the potential remedy options address the AEC and/or resulting detrimental effects on customers, as well as whether they are effective and proportionate. 

Some of the remedies proposed include:

• Information/transparency remedies: this includes mandating what, how and when information is provided to customers to help them make informed choices. This might involve annual 'wake-up' letters from vet practices, facilitating the development of comparison tools, and providing separate pricing information for medicines and other charges.
• Price/charging remedies: this may involve re-aligning prices with costs plus a reasonable return if it is found that current prices significantly exceed costs. This could include imposing maximums for prescription fees or prices for other services.
• Market opening remedies: these would aim to lower barriers to entry and promote competition. This could involve targeted structural remedies related to certain veterinary services or areas and may address issues such as local concentration or self-preferencing restrictions, and may include making recommendations to regulatory bodies and government regarding changes to the regulatory framework.

However, the CMA reiterates that it is at an early stage of considering potential remedies and as its understanding of the markets and potential issues develop, it expects these suggestions for remedial measures to evolve. It also emphasises that it has not yet concluded whether there are any competition concerns, and thus the potential remedies are purely hypothetical at this stage. 

Next steps

The CMA is inviting interested parties to provide submissions commenting on the issues and potential remedies, the deadline for which is midnight on 30 July 2024. In particular, the CMA requests that commenting parties give views, with reasons and evidence, on whether:

a) the issues the CMA has identified should or should not be within the scope of its investigation and are correctly described or are mischaracterised; and

b) there are further issues the CMA has not identified but which it should consider.

It also welcomes views on the potential remedies it has identified, including the potential for the remedies to effectively address any AECs or resulting detrimental effects on consumers, the size of any associated costs and who would incur them, the potential for unintended consequences to arise and possible mitigation strategies, any other potential remedies, who these remedial measures should apply to, and the extent to which the remedies might also have an impact on practices which offer equine or farm services. In addition, the CMA welcomes comments and suggestions on possible approaches or methodologies which it could use to gather evidence and undertake analysis with regards to the identified issues.

The investigation is expected to be completed by 22 November 2025. The outcomes of this inquiry could have significant implications for veterinary practices, pet owners, and the wider pet care industry in the UK. 

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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