The Competition and Markets Authority (CMA) has provisionally decided to launch a formal market investigation of the veterinary sector after finding “multiple concerns” in their review of the veterinary market. It’s initial review prompted over 56,000 responses from the public and veterinary industry.
The review highlights multiple concerns in the market, including:
- Consumers may not be given enough information to enable them to choose the best veterinary practice or the right treatment for their needs
- Concentrated local markets, in part driven by sector consolidation, may be leading to weak competition in some areas
- Large corporate groups may have incentives to act in ways which reduce choice and weaken competition
- Pet owners might be overpaying for medicines or prescriptions
- The regulatory framework is outdated and may no longer be fit for purpose
The CMA has provisionally decided that it should launch a formal market investigation focused on its provisional analysis of the issues in the sector and is now consulting on this proposal.
A market investigation enables the CMA to investigate its concerns in full and intervene directly in markets if it finds that competition is not working well. Along with compelling those under investigation to provide information, it gives the CMA access to a wide range of legally enforceable remedies, such as mandating the provision of certain information to consumers, imposing maximum prescription fees and ordering the sale or disposal of a business or assets.
[A market investigation] gives the CMA access to a wide range of legally enforceable remedies, such as mandating the provision of certain information to consumers, imposing maximum prescription fees and ordering the sale or disposal of a business or assets
Sarah Cardell, chief executive of the CMA, said: “We launched our review of the veterinary sector last September because this is a critical market for the UK’s 16 million pet owners. The unprecedented response we received from the public and veterinary professionals shows the strength of feeling on this issue is high and why we were right to look into this.
“We have heard concerns from those working in the sector about the pressures they face, including acute staff shortages and the impact this has on individual professionals, but our review has identified multiple concerns with the market that we think should be investigated further.
“These include pet owners finding it difficult to access basic information like price lists and prescription costs – and potentially overpaying for medicines. We are also concerned about weak competition in some areas, driven in part by sector consolidation, and the incentives for large corporate groups to act in ways which may reduce competition and choice.
“Given these strong indications of potential concern, it is time to put our work on a formal footing. We have provisionally decided to launch a market investigation because that’s the quickest route to enable us to take direct action, if needed.”
The CMA review
The CMA launched its review of the sector in September 2023 and issued a call for information (CFI) as part of that. This brought 56,000 responses – including 45,000 from the general public and 11,000 responses from those working in the vet industry which includes around a fifth of UK vets and veterinary nurses. The CMA also engaged extensively with, and secured feedback from, veterinary practices, industry bodies, charities, and others to understand the issues in the provision of these services.
Although the call for information is not statistically representative of pet owners or the vet industry, the level of response demonstrates how important this issue is to millions of pet owners and those working in the sector.
The CMA’s concerns
Based on the evidence gathered so far, the CMA has five key concerns that it proposes to investigate further:
1. “Consumers may not be given enough information to enable them to choose the best veterinary practice or the right treatment for their needs”
- Most veterinary practices do not display prices on their website – of those practices checked, over 80 percent had no pricing information online, even for the most basic services. Pet owners tend not to shop around between veterinary practices and assume prices will be similar, although that is not always the case
- People are not always informed of the cost of treatment before agreeing to it – around one fifth of respondents to the CFI said that they were not provided with any cost information before agreeing to tests, around 1 in 10 said they were not provided with cost information before their pet had surgery, and around half said they were not informed about costs before agreeing to out of hours treatment
- A company can own multiple veterinary practices in a local area without making that clear – for example, four out of six of the largest groups don’t change the name or branding when they take over an independently owned veterinary practice. This means pet owners are not always comparing competitors when choosing a veterinary practice
2. “Concentrated local markets, in part driven by sector consolidation, may be leading to weak competition in some areas”
Market concentration measures how many competitors operate in a particular market – the fewer firms operating in a market, the more concentrated it is
- In 2013, around 10 percent of veterinary practices belonged to large groups, but that share is now almost 60 percent and many of the large groups have expressed an intention to continue expanding their business through acquisition of independently owned practices
- To illustrate this another way, since 2013, 1,500 of the 5,000 veterinary practices in the UK have been acquired by the six large corporate groups: CVS, IVC, Linnaeus, Medivet, Pets at Home and VetPartners
- This may reduce the number of business models in locations where most or all of the first opinion practices are owned by one large corporate group, giving less choice to consumers because they tend to choose practices close to home
3. “Large integrated groups may have incentives to act in ways which reduce choice and weaken competition”
Given the significant and ongoing growth of large corporate groups, the CMA is concerned that:
- The large, integrated corporate groups (especially those whose business models include significant investment in advanced equipment) may concentrate on providing more sophisticated, higher-cost treatments, meaning that consumers are less able to access simpler, lower cost treatments even if they would prefer that option
- To varying extents, the large vet groups have also bought businesses which offer related services such as specialised referral centres, out of hours care, diagnostic labs and/or crematoria. These large groups may have the incentive and ability to keep provision of these related services in the group, potentially leading to reduced choice, higher prices, lower quality and exit of independent competitors
4. “Pet owners might be overpaying for medicines or prescriptions”
- Vets must use signs in reception or treatment rooms to tell customers that they can get a prescription for medicine and buy it elsewhere, but the CMA is concerned that these may not be effective. While it can be convenient to buy a medicine directly from the vet as part of a consultation, around 25 percent of pet owners did not know that getting a prescription filled elsewhere was an option – meaning they are missing out on potential savings, even with the prescription fee
- Some veterinary practices may make up to a quarter of their income selling medicines – so there may be little incentive to make pet owners aware of alternatives
- The current regulatory regime may contribute to concerns by restricting veterinary practices’ ability to source cheaper medicines online.
5. “The regulatory framework is outdated and may no longer be fit for purpose”
- The main legislation in the industry dates from 1966, before non-vets were able to own vet practices. It relates to individual practitioners, not practice owners or veterinary practices as businesses. This means that the statutory regulator, the RCVS, has limited leverage over the commercial and consumer-facing aspects of veterinary businesses, for example how prices are communicated or whether there is transparency about ownership of veterinary practices or related services
- The RCVS has put in place a practice standards scheme (PSS) which applies to the veterinary practice rather than individual vets. Only 69 percent of eligible practices have signed up to this voluntary scheme, meaning that almost a third of the market has not committed to this approach
- The provisional view is that outcomes for consumers could be improved if regulatory requirements and/or elements of best practice could be monitored or enforced more effectively
Next steps
The CMA has launched a four-week consultation to seek views from the sector on the proposal to launch a market investigation. The consultation closes on 11 April 2023 at which point it will consider the responses received and a decision will be made on how to proceed.
For further information visit the CMA’s veterinary services case page. This includes the consultation document which sets out more details and statistics on today’s update.
