Following the CMA’s recent scrutiny and use of its powers to unwind a number of transactions in the veterinary services market, the authority has launched a market-wide investigation into the small animal veterinary services market.
The market is characterised by high consolidation. The CMA will consider how this may be operating to stifle competition in the sector, combined with other features such as consolidated upstream markets amongst suppliers, exclusivity arrangements between veterinary practices with suppliers, and referral agreements.
The CMA has invited responses to three separate questionnaires from three categories of interested parties:
- Pet owners, i.e. users of household pet veterinary services
- Veterinary practices
- Suppliers to veterinary practices, e.g. suppliers of in-clinic diagnostic equipment and consumables, external diagnostic services by laboratories, and pharmaceutical products
The CMA’s primary focus will be assessing how well the market is operating for end users of household pet veterinary services (pet owners) in terms of prices, quality, and choice/range of services. In this regard, the CMA will likely be focusing on the impact of large veterinary practice groups that own many local veterinary practices but where it may not be obvious to pet owners that the practice is part of a large group. And, where there is little effective competition in a local market due to common ownership of local veterinary practices. This aspect of the CMA’s market investigation is likely to have parallels with the CMA’s concluded market investigation into funeral services, where the CMA ultimately required funeral directors to introduce greater transparency on prices and ownership to allow customers to better “shop around”.
However, it appears the CMA will also be considering any challenges faced by veterinary practices in offering pet owners lower prices and choice/range of services. In relation to this, the CMA will likely focus on the impact on competition of significant suppliers suspected of wielding market power. Notably, the CMA has previously found Idexx Laboratories to hold a dominant market position in the hypothetical markets for the supply of in-clinic testing equipment in the UK. However, it was ultimately concluded that there were no grounds for action due to insufficient evidence that the practices complained of were likely to restrict or significantly impair effective competition in those markets.
The CMA’s market investigation could also lead to Behavioural Competition Act 1998 investigations if the they uncover agreements which could have the intention or effect of restricting competition in a relevant market in the UK or unilateral conduct which could amount to an abuse of a dominant market position.
Whatever the form, the CMA’s market investigation will likely lead to regulatory change impacting the household pet veterinary services sector. Engagement in the CMA’s market investigation may be required or otherwise advised to advocate for the most sensible, practical or least disruptive outcome. Given the market-wide scrutiny, operators in the sector would also be advised to ensure they are on top of competition compliance and any latent risks uncovered. Get in touch for further information about how we can assist.
Post by Angela Gregson
Angela is a Legal 500 ranked competition law specialist with over 13 years’ experience practicing in major commercial law firms.