CMA identifies multiple concerns in vets market

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 to 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.

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, vet 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 5 key concerns that it proposes to investigate further:

Consumers may not be given enough information to enable them to choose the best veterinary practice or the right treatment for their needs.

• Most vet practices do not display prices on their website – of those practices checked, over 80% had no pricing information online, even for the most basic services. Pet owners tend not to shop around between vet 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 one 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 vet practices in a local area without making that clear – for example, only 4 out of 6 of the largest groups don’t change the name or branding when they take over an independently owned vet practice. This means pet owners are not always comparing competitors when choosing a vet practice.

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% of vet practices belonged to large groups, but that share is now almost 60%, 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 vet practices in the UK have been acquired by the 6 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.

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 within the group, potentially leading to reduced choice, higher prices, lower quality and exit of independent competitors.

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% 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 vet 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.

The regulatory framework is outdated and may no longer be fit for purpose.

• The main regulation in the industry dates from 1966, before non-vets were able to own vet practices. It relates to individual practitioners, not practice owners or vet 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 vet practices or related services.
• The RCVS has put in place a Practice Standards Scheme which applies to the vet practice rather than individual vets. Only 69% 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 4-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 veterinary services case page. This includes the consultation document which sets out more details and statistics on today’s update.

Notes to editors:

1. Under section 131 of the Enterprise Act 2002, the CMA may make a market investigation reference to its Chair for the constitution of a Market Reference Group where it has reasonable grounds for suspecting that any feature, or combination of features, of a market in the United Kingdom (UK) for goods or services, prevents, restricts or distorts competition in connection with the supply or acquisition of any goods or services in the UK or a part of the UK.

2. In a market investigation, a Market Reference Group is the independent panel that is required to decide whether there is a prevention, restriction, or distortion of competition. If it does identify such an adverse effect on competition, then it will consider what, if any, appropriate action should be taken to address this.

3. Due to the self-selecting nature of the call for information, the 56,000 responses received are not statistically representative of the UK.
4. The 6 largest veterinary groups are: CVS, IVC, Linnaeus, Medivet, Pets at Home and VetPartners
5. The CMA’s decision to consult on a market investigation is based on a range of evidence: a call for information on the CMA’s website which attracted around 56,000 responses; qualitative market research with pet owners as well as broad engagement across the sector, including with all 6 large corporate suppliers of veterinary services,  a number of independent veterinary practices, industry regulators, industry bodies, government agencies, the animal charity sector, and pet insurance companies.
6. The CMA would like to hear from those who may be substantially impacted by its proposal to conduct a market investigation by 11 April 2024, particularly if they have views on any of the following:
   • whether consumers are given enough information to enable them to choose the best veterinary practice or the right treatment for their needs
   • whether concentrated local markets may be leading to weak competition in some areas
   • whether large integrated groups may have incentives to act in ways which reduce choice and weaken competition
   • whether pet owners might be overpaying for medicines or prescriptions
   • whether the regulatory framework remains fit for purpose
7. For more information visit the CMA’s vets consultation page.
8. The figures on making pricing available on websites is based on the CMA’s review of over 2368 websites in total: 1399 websites for practices belonging to the large corporate groups and 969 websites belonging to independent practices.
9. All media enquiries should be directed to the CMA press office by email on press@cma.gov.uk, or by phone on 020 3738 6460.