How to ensure a fairer vet market for consumers

The UK veterinary market has seen significant changes over the past few years, ranging from increased pet ownership to consolidation.

In 2024, the UK Competition and Markets Authority (CMA) launched a full market investigation to ensure that this market allows for strong competition that provides good outcomes for pets and pet owners alike.

Market-wide investigation

An initial market review by the CMA found a lack of transparency and limited accessibility for consumers to basic information such as prices lists and prescription costs.

This led to a formal UK market investigation into the supply of veterinary services for household pets in May 2024.

Whereas many similar European authorities are generally restricted to investigating individual companies, the CMA has the power to conduct whole-market investigations.

This allows for an in-depth assessment of whether there is an “adverse effect on competition” within a given market.

To address competition issues at a market-wide level, the CMA can take direct remedial action and impose remedies on a whole sector.

These can take the form of legally binding undertakings and orders, or non-binding recommendations to the government or relevant bodies.

The CMA received 56,000 responses to its initial review, and experienced extensive engagement – from parties ranging from large vet practices to veterinary representative bodies – in response to its Issues Statement and working papers.

This made it clear that concerns within the veterinary sector are widespread and have sparked considerable public interest.

Remedies to improve competition

If the CMA determines an adverse effect on competition within the veterinary sector, it has several potential remedies at its disposal. These remedies can be either behavioral (targeting practices and conduct) or structural (requiring changes to the market structure itself). Examples include:

Mandating providing information to consumers

With 80% of vets having no pricing information on their websites, one major concern in the veterinary sector is the lack of pricing information available to consumers.

To address this issue, the CMA may require practices to publish clear, transparent pricing for consultations, medications and other services separately, allowing pet owners to make more informed decisions.

This remedy mirrors similar actions taken by the CMA in the funeral sector in 2018, where businesses were required to publish headline and individual prices for funerals and component services both online and in their premises.

Additionally, to promote competition, the CMA may mandate veterinary practices to send out annual ‘wake-up’ letters to registered customers, encouraging them to reconsider their choice of ‘first-opinion practice’ for the day-to-day care of their pets.

Requiring maximum prices/fees

If current prices are found to be well in excess of costs, the CMA may seek to realign prices with cost plus a reasonable return. This could include imposing maximum prices for prescription fees, or maximum prices or mark-ups for other services.

Imposing structural remedies

If the CMA finds that the consolidation of veterinary practices under larger corporate groups is negatively impacting consumers due to fewer choices and higher prices, they may order the divestment of certain businesses or parts of businesses.

Using targeted structural remedies in this way can open the market and lower barriers to entry.

The UK’s competition regulator certainly has form in a merger context. For example, in 2022, the acquisition of Goddard Veterinary Group by VetPartners was only cleared subject to the divestment of 8 sites in local areas where the CMA had identified competition concerns.

Suggesting changes to the regulatory framework

The CMA has previously suggested the possibility of using its powers to incorporate remedies into the Royal College of Veterinary Surgeons (RCVS) Code of Professional Conduct and/or associated guidance.

The goal of this is to ensure that the UK’s veterinary profession evolves in a way that supports both consumers and professionals in a competitive and fair market.

Broader international outcomes

Concerns about competition in the veterinary sector are not confined to the UK.

For instance, a growing presence of non-veterinarian-owned practices in the US and also in Ireland is sparking concern that clinical standards and the public interest may be compromised in the pursuit of profits.

Meanwhile, in France, action taken in 2023 resulted in 4 large corporate practices being forced to deregister on the basis that their model undermined the professional independence of vets.

Among the companies impacted was IVC Evidensia, Europe’s largest corporate veterinary company with operations across 20 countries, including the UK where it had 400 practices.

Increased private equity investment in the veterinary industry is also driving the presence of large corporate groups, meaning many practices may not be nationally owned.

Despite the market investigation tool being specific to the UK, if the CMA’s market investigation finds broad sector issues, it may encourage authorities in other countries to use their powers to investigate specific parties, prompting wider change in the global veterinary industry.

Resetting the balance

By highlighting the challenges faced by vets and pet owners alike, the CMA investigation underlines the conflict between prioritizing pets or profits.

The authority’s provisional decision is expected by May/June this year. If competition concerns are found, it is likely that more than one type of remedy will be required due to the diversity of the issues being investigated.

These could have a significant impact on the veterinary sector in the UK and could potentially also serve as a model for other countries facing similar challenges.

CMA’s areas of concern about the UK veterinary market

• Consumers lack information for decision-making.
• A lack of choice in local markets, driven in part by sector consolidation, may be leading to weak competition in certain areas.
• Pet owners may be overpaying for medicines or prescriptions.
• Vet businesses have the incentive and ability to limit consumer choice when providing treatment or recommending related services.
• The regulatory framework is outdated and operates in a manner that does not facilitate a well-functioning market.