At the outset, it is important to note that this review is only in respect of veterinary services for household pets, so does not include any review of the farm and equine services. Whilst it is in respect of veterinary services, that is to include all of the following:

• First opinion practices
• Out of hours providers
• Referral centres
• Veterinary hospitals
• Crematoriums
• Laboratories
• Pet Health Plans
• Medication

As part of the review, the CMA have identified that in 2023 60% of practices providing services to household pets are under corporate ownership of one of the 6 main corporate groups (IVC, Pets at Home, CVS, Vet Partners, Medivet and Linnaeus), although we believe this figure is possibly slightly higher.

They believe the overall market for those services provided to household pets to be in the region of £5.7bn with first opinion veterinary services accounting for between £2bn and £2.5bn of that total.

The Office for National Statistics has outlined that the price of veterinary services had increased by 50% since 2015. Whilst we acknowledge that prices have often increased at a greater rate than headline inflation, when compared to industry specific inflation, particularly salary costs which have increased substantially in recent years, those price rises have been warranted.

Moore Scarrott Veterinary provided input, via the BVA, in support of the initial review outlining that whilst prices had increased, for independent veterinary practices at least, overall profit margins had remained largely consistent over the past 5 years i.e. the increase in prices was offset by higher costs. However, we also acknowledge that there are other areas of the profession where profit margins are likely to have increased as a result of other changes in that period of time.

The CMA have identified that in 330 postcode districts, 1 corporate group owns in excess of 30% of the practices which they believe significantly reduces competition. Some of those areas have already been subject to CMA reviews. However, that will be a very small proportion of the potential 330 postcode districts that have been identified.

The 5 main areas of concern the CMA have identified are as follows:

1. Consumers may not have been given enough information to enable them to choose the best veterinary practice or the right treatment for their needs.
2. Concentrated local markets, in part driven by sector consolidation, may be leading to weak competition in some areas.
3. Large integrated groups may have incentives to act in ways which reduce choice and weaken competition.
4. Pet owners might be overpaying for medicines or prescriptions.
5. The regulatory framework is outdated and may no longer be fit for purpose.

The CMA has launched a 4 week consultation to obtain feedback on the proposal to launch a full market investigation. The consultation closes on 11 April 2024, at which point any responses received will be considered before a decision is made on how to proceed.

From the CMA report it is clear that the 6 main corporate groups have already made submissions to the CMA on potential changes that could be made in order to avoid the need for a full market review. However, the report also makes it quite clear that those proposals in insolation will not be sufficient to avoid a full market review taking place. Therefore, unless there are significant contributions that come through in the consultation period, we would anticipate that a full market review would subsequently be opened.

This can be a very in depth process and potentially take 18 – 24 months to complete for any proposals to be put forward and subsequently implemented.

Based on the information in the initial CMA review, the potential changes and impact of these could be as follows:

• Clearer identification of the ownership of practices. This would particularly apply to those corporate groups where a practice is acquired and the branding is not updated to make it clear that they are part of a larger corporate group.
• Clearer transparency on the levels of prices. Whilst it is already best practice to publish the prices for most common services and medications, this could be something that becomes a regulatory requirement to aid consumer choice and decision making when deciding on a first opinion practice.
• Greater obligations in respect of transparency of pricing for subsequent procedures, potentially to include written fee estimates and outlining a number of treatment levels as opposed to just the ‘gold standard’ offering with the highest price.
• Clarity over the ownership and any incentives received for referrals to associated businesses. This would include the likes of referral centres , out of hours work and to include external laboratory and cremation services.
• Potentially mandated maximum prescription fee and also minimum prescription lengths, so as to enable clients to benefit from lower medication prices if they are available. There is also the potential to be a regulatory requirement to make clients aware that they are able to request a prescription. The follow on from this is ensuring that veterinary practices have access to the lowest priced medications, as it is often cited that the price they can purchase products from their wholesaler is more expensive than those available at online pharmacies.
• Providing an annual ‘wake up’ letter to clients to remind them to consider who is providing their first opinion veterinary services.
• Targeted structural changes in specific areas. Whilst it is not explicitly mentioned, we would assume that it is primarily in respect of the 330 postcode districts that have been identified where there is greater than 30% ownership by a single corporate group.

Whilst all of the above are only suggestions at this point in time and are subject to a more detailed review, it is quite clear which direction of travel the CMA is looking to take.

We would be quite confident that these changes will not have a material impact on our independent practices that we work with. However, the CMA is reviewing the profession as a whole and it is likely to make some elements that are currently best practice a regulatory requirement as part of those changes. Those changes may not be directed at independently owned practices but any changes are likely to apply to the whole profession rather than differentiating between corporate and independently owned practices.

Whilst there may be some nervousness around the likes of publishing headline prices, this could potentially aid independent practices where we know the prices charged are generally lower than the various corporate groups.

There are some items that have been suggested by the CMA where we would have concerns, particularly over the responsibility for clinical care, such as if a minimum prescription length was included and how that would be managed with specific clinical concerns and those would obviously need to be addressed as part of any full review.

As part of any more detailed review, it is also intended that the CMA would revisit the Supply of Veterinary Medicinal Products Order 2005 which was reviewed by the Competition Commission (the predecessor body of the CMA) in 2003.

There is no immediate impact to our client practices as a result of this initial review and it is important that practices are continuing to be run based on the landscape as it currently stands. Prices and salaries should be reviewed in line with normal timeframes and with consideration to overall commercial requirements, rather than holding those back based on the CMA review, which as outlined above could take some time to complete, assuming it proceeds.

However, there is likely to be a lot of public attention and press coverage of the initial review, with all veterinary practices likely to be tarred by the same brush in terms of some of the concerns raised. Therefore, it will be more important than ever to ensure there is clear communication with clients over pricing and the options that are available for treatment, as we know the vast majority of our clients already have in place.

Given that there is likely to be pressure in the consultation room on individual vets being challenged over prices, it is also extremely important to ensure there is the correct communication within the wider practice team as to how those questions should be dealt with to help manage the situation.

Moore Scarrott Veterinary will be providing a submission to the CMA as part of the consultancy process in support of independent veterinary practices and some of the points and concerns that have been raised. If individuals would like to make a submission to the CMA, then they are able to do by emailing Vetservicesreview@cma.gov.uk