In response to mounting concerns that pet owners are not receiving adequate value for their hard-earned money, the Competition and Markets Authority (CMA) has unveiled plans to initiate a comprehensive investigation into the UK’s £2 billion veterinary sector. This decision comes against the backdrop of rising unease that the acquisition of smaller veterinary practices by corporate giants has substantially curtailed consumer choice and inflated costs within the industry.
The CMA has noted a marked transformation in the composition of the veterinary landscape in recent years. In 2013, nearly 90% of veterinary practices in the UK were independently operated. By 2021, this figure had plummeted to approximately 45%, according to the latest figures from regulatory sources. This shift has raised legitimate concerns about the competitive dynamics of the industry.
Furthermore, the CMA has spotlighted the dramatic escalation in the expenses associated with caring for household pets, a trend that has outpaced inflation rates. This financial burden, coupled with the prevailing cost-of-living crisis, is exerting considerable pressure on households across the nation. Indeed, reports of increased pet abandonment have become more prevalent, with charities attributing this unfortunate phenomenon to pet owners’ inability to bear the escalating costs of pet care.
Startlingly, some pet owners have been forced to sacrifice their own creature comforts and essential expenses to finance the healthcare of their beloved animals, as highlighted by the veterinary charity, the PDSA. Such anecdotes underscore the magnitude of the challenge faced by many in ensuring the well-being of their pets.
The CMA is also troubled by the lack of transparency in pricing and treatment options available to pet owners when selecting a veterinary service. Often, it remains unclear whether a practice is affiliated with a larger corporate entity. Sarah Cardell, Chief Executive of the CMA, underscored the significance of these issues, stating, “Caring for an ailing pet can generate substantial financial stress, especially in the context of other cost-of-living concerns. It is imperative that individuals receive clear and transparent information on pricing to assist them in making well-informed choices.”
Ms. Cardell further emphasised the need for scrutiny, stating that the veterinary industry has witnessed significant consolidation in recent years, making it imperative to assess the functionality of the market.
In response to these mounting concerns, the CMA has urged both pet owners and veterinary practitioners to actively contribute to the review through its website. The authority has outlined plans to present its findings in early 2024, promising a thorough and diligent examination of the veterinary industry’s dynamics.
Notably, the announcement of this probe has had far-reaching repercussions in the financial markets. Shares in Pets at Home, a prominent player in the pet services arena boasting a 24% market share, tumbled by 12% in the wake of the news. Similarly, CVS Group, renowned for its business model centred around acquiring smaller clinics and veterinary groups, witnessed a staggering drop of over 25% in its stock value.
Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown, provided insightful analysis of these market reactions, stating that the sizeable market response underscores the formidable challenge this investigation poses for pet-focused companies. CVS Group, whose core strategy revolves around acquiring smaller clinics and veterinary groups, could face direct and substantial implications for its operations. Pets at Home, despite its retail prowess, also operates a substantial veterinary business and is unlikely to remain unaffected by this intense scrutiny.