13 Jan 2025
Several prominent veterinary groups have also warned the Competition and Markets Authority (CMA) that recent redundancies show the sector is not as resistant to economic pressures as it believes.
The concerns were outlined in submissions, published on 3 January, responding to an earlier working paper setting out the current investigation’s proposed approach to the issue.
That document stressed the inquiry group’s methodology could be revised in light of data submitted by respondents.
But it also highlighted CMA guidelines for market investigations, such as the current one into companion animal services, which state firms would generally make a “normal” rate of profit, equivalent to the minimum needed to maintain current production for the long-term in a competitive market.
It continued: “If excess profits have been sustained over a sufficiently long period of time, this could indicate limitations in the competitive process.”
But that approach was criticised by the chartered accountancy firm Moore Scarrott Veterinary, in a submission also endorsed by the Federation of Independent Veterinary Practices.
It said: “It is simplistic to suggest that, within a market place where individuals must hold the required qualifications to practice, market forces will bring profits achieved to a ‘normal’ level and ‘excess profits’ are the indicator that action is required.
“For that premise to hold, there must be an unlimited supply of appropriately qualified individuals available to enter the market place. Within the veterinary profession, patently this is not the case, as has been well documented.”
Meanwhile, IVC Evidensia called for “an intensive period of engagement and collaboration” between the CMA and companies such as itself in the wake of the paper’s proposals.
It warned there were “fundamental challenges” in the proposed approach and the inquiry would not be able to rely on its analysis if it was not sufficiently robust.
Jay Hill, managing director of Tweedy Browne – a shareholder in the CVS Group – said he felt compelled to address what he saw as “flawed logic” in the CMA’s approach.
The authority faced further criticism for its characterisation of the sector’s capacity for withstanding broader economic turbulence, despite acknowledging challenges such as COVID-19 and Brexit.
The working paper said: “We note that the supply of veterinary services for household pets is generally considered resilient to economic downturns and unlikely to be materially affected by unusual macroeconomic conditions, with consumers continuing to spend on their welfare of their pets during periods of economic decline.”
But a joint submission by the BVA, BVNA, BSAVA, SPVS and VMG countered: “We are extremely concerned that the CMA is failing to recognise the extent of the impact on veterinary practice of the cost of living crisis, including the recent redundancies across Linnaeus, IVC and VetPartners, which are related to decreased transaction volumes.”
The groups also reiterated their fears about the potential for unintended welfare consequences as they warned the proposed approach risked examining the whole sector without a sufficient knowledge base.
Many respondents raised further concerns about the proposed five-year timescale of analysis, which they feared could lead to a “skewed” perspective, because of events such as the pandemic.
Although the investigation process is set to last for most of this year, parties only have until March to make final submissions before provisional recommendation decisions are issued in May or June.
