Competition experts say no guarantees veterinary prices will come down
By: Communications
Competition experts from the University of East Anglia (UEA) and the University of Glasgow have warned there is no guarantee that transparency remedies will bring down veterinary prices, or keep them from increasing above inflation, following the publication today of the final report of a Competition and Markets Authority (CMA) investigation.
They add that the risk of further corporate consolidation is “real”, with the CMA’s main instrument for reviewing veterinary practice mergers having been significantly blunted during the course of their inquiry.
Dr Scott Summers is a competition law expert from UEA’s Norwich Business School, and a member of the Centre for Competition Policy. Together with Dr David Reader, from the University of Glasgow, he has been leading a separate project to examine what has been driving changes in the country’s vet industry.
Their research looks at how vulnerable pet owners navigate rising costs and access care, how the growing takeover of vet practices by large corporate groups is affecting prices and choice, and what role private equity plays in shaping the market. They also contributed evidence to the CMA inquiry.
Dr Summers said: “Problems in this market are not the fault of veterinary professionals – the last people to whom pet owners should be expressing their anger to is the vets and vet nurses who work on the frontline.
“The CMA’s final report confirms that fault lies with the workings of the market and, in several cases, the practices/incentives of the management of some larger veterinary chains. There is no guarantee that transparency remedies will ‘bring down prices’, nor keep them from increasing in the future.
“Transparency of, for example, prices, ownership and alternative purchasing opportunities has been a major theme of this investigation, so transparency-centric remedies were always likely to be at the centre of efforts to, as the CMA puts it, ‘empower consumers to make informed decisions’. For the most part, they are to be welcomed unreservedly.
“But empowering consumers is only half the challenge. There is no guarantee that greater price transparency for procedures/services will stimulate meaningful improvements to price competition, and lead to lower prices, as the report is indicating.
“The investigation has uncovered clear obstacles to price competition, including veterinary businesses facing a lack of significant demand-side constraints from pet owners and insurers, which transparency alone will not solve. For example, when choosing a first opinion practice, the critical moment for competition to take place, the CMA has found that consumers are not typically guided by price, and nor are they particularly interested in seeking out this information, regardless of how easy it is to come by.
“For other reasons, some peculiar to veterinary markets, there is a low propensity for consumers to switch between providers, even when they have knowledge of potential cost savings elsewhere. Save for medicines, there is no mention afforded to remedies that would incentivise consumers to switch providers.”
Dr David Reader, from the University of Glasgow’s School of Law, said: “The risk of further corporate consolidation is real, and the CMA’s main instrument for reviewing veterinary practice mergers has been significantly blunted during the course of this investigation.
“Following implementation of these remedies, we therefore expect a further decline in the number of independent veterinary practices, despite a recent surge in the number of new independents while the inquiry has been taking place.
“We fear the findings put misplaced faith in the ability of merger control to keep further consolidation in check. The impact of the government’s pro-growth strategic steer, and how proposals requiring legislative change may also never see the light of day.
“Some of the remedies require legislative change, of which there may be limited, or no, political appetite for under the Labour Government’s growth agenda. For example, key reforms on accountability, regulatory oversight, and complaints/redress have been left to the government’s update of the Veterinary Surgeons Act 1966.
“The CMA presents a strong acknowledgement of the link between access to affordable care and animal welfare. We do not believe access to affordable care is assured by these remedies, but have no doubt that this is what the CMA had sought to achieve.”
Dr Summers and Dr Reader say the value of transparency will always be capped by the opportunities to exercise choice and the practical ability to switch – and it is a question the CMA does not appear to have found a definitive answer to.
Dr Reader said: “What this boils down to is the difference between transparency remedies that either assist with reducing average vet bills – which many pet owners are now expecting, following the release of the Final Report – or those that merely remove the surprise element of a high vet bill or prompt consumers to consider choosing more affordable treatment options, which comes with a guilt factor, as the CMA has also acknowledged.
“We speak so much about a ‘package of remedies’ in competition law, and there is a lingering sense that the transparency remedies, so often a starting point for addressing market failures, are also the end point in this investigation when, perhaps, they should be laying the foundations for more substantial initiatives. Our fear is the scenario where the remedy is ‘transparency for transparency’s sake’.
“This is not to downplay the potential positive impact the CMA’s remedies could have on the price of veterinary medicines. The investigation has demonstrated that this is an area crying out for simplification and for consumers to be empowered to shop around. But even these remedies risk a (frankly absurd) situation where an important income stream of independent providers is, to a certain extent, redirected towards large veterinary groups operating in the online vet medicines space.”
Dr Summers added: “While welcoming the cap on prescriptions, we do so with caution. There are legitimate concerns about how this will impact consultation/service fees that have historically been subsidised by higher markups on medicines. Moreover, medicine accounts for roughly 20% of first opinion practice revenues and, insofar as this offers a proxy to the proportion of expenditure for the average pet owner, savings on the average bill may be limited.”
Since launching their research project in late 2023, Dr Summers and Dr Reader have become key voices in the discussions around veterinary pricing, and helped inform a BBC Panorama programme on why vet bills are increasing - highlighting how corporate ownership models can impact on choice and pricing.
In addition, their work helps vets and industry professionals understand how market investigations work and how political and regulatory decisions shape the sector, sharing their insight through public webinars, specialist veterinary publications and events, as well as mainstream media outlets.
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