Pets at Home and CVS shares plunge following probe announcement
The competition watchdog is launching an investigation into the UK’s vet industry, amid concerns pet owners are not getting value for money, sending shares in one of the country’s biggest industry names sharply downward this morning.
A number of issues have been flagged by the Competition and Markets Authority (CMA) following on from its initial review last September.
The review, which prompted over 56,000 responses from the public and vet industry, raised concerns about how animal care clinics are being run throughout the UK.
This included fears that owners are being overcharged for medicines and how a rise in larger groups taking over smaller practices may lead to reduced competition in the market.
In 2013, around 10 per cent of vet practices belonged to large groups, but that share is now almost 60 per cent.
The CMA said this morning: “Many of the large groups have expressed an intention to continue expanding their business through acquisition of independently owned practices.”
“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.”
Other concerns raised by the watchdog included consumers not be given enough information to enable them to choose the best veterinary practice or the right treatment for their needs.
This morning CVS Group, which is listed on the stock exchange, said it had engaged “constructively” and suggested remedies to address the CMA’s concerns which it felt “could address the CMA’s concerns more quickly than an 18-month investigation.”
That statement hasn’t stopped shares losing a fifth of their value this morning.
Additionally, the CMA said “large corporate groups may have incentives to act in ways which reduce choice and weaken competition”.
The authority said today it would provisionally launch a formal market investigation.
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.”
She added: “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.”