CMA launches consulation regarding market investigation into household pets veterinary services
Following the CMA’s recent scrutiny and use of its powers to unwind a number of transactions in the veterinary services market, the CMA has launched a consultation into whether to open a market wide investigation into the small animal veterinary services market.
The market is characterised by high consolidation and the CMA will be considering how this, in combination with other features in the sector such as consolidated upstream markets amongst suppliers, exclusivity arrangements between veterinary practices with suppliers, and referral agreements may be operating to stifle competition in the sector.
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. of in-clinic diagnostic equipment and consumables, external diagnostic services by laboratories, and pharmaceutical products.
The CMA’s primary focus will be on assessing how well the market is operating for end users of household pet veterinary services i.e. pet owners in terms of prices, as well as quality and choice/range of services. In this regard the CMA will likely be focusing on the impact of large veterinary practice groups who 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 any CMA 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 is likely to be focussing 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, ultimately concluding in that case it had no grounds for action due to insufficient evidence for finding the practices complained of were likely to restrict or significantly impair effective competition in those markets.
A CMA market investigation could also lead to behavioural Competition Act 1998 investigations if the CMA uncovers 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, a CMA market investigation is likely to lead to regulatory change impacting the household pets veterinary services sector. Given the market-wide scrutiny, operators in the sector would be well 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.
