- CMA findings as expected
- More price transparency needed
- Possible cap on cremations mark-up
The CMA’s (Competition and Markets Authority) potential remedies for the UK’s £6.3 billion veterinary market proved to be more bark than bite, sparking a 13% jump in the share price of CVS (CVSG:AIM) and a 3% rise in Pets at Home (PETS).
Since the CMA announced its formal investigation into the veterinary market just under a year ago, shares in vet practice operator CVS are up 29% while pet retailer and veterinarian Pets at Home languish 16% below year ago levels.
MORE TRANSPARENCY NEEDED
Broadly, the CMA would like pet owners to get more information so they can choose the treatment which best suits their individual circumstances.
This requires businesses to provide ‘clear and accurate’ price information on different treatment options and referrals.
The CMA would like to see more support from the industry for pet owners who have recently suffered the death of a pet through measures aimed at increasing transparency of cremations services.
The regulator is considering a cap on the mark-ups that vet practices can make when selling cremations if its ongoing investigation concludes that margins are ‘very high’ on these services, which are sold to pet owners during a ‘vulnerable’ moment.
In this context, it worth noting that CVS announced the disposal of its crematorium services arm to Amina Care UK on 24 April for a cash consideration of £42.4 million.
CVS said it expected to book a one-off profit from the disposal of circa £32 million in its 2025 accounts.
The proposed remedies follow the CMA’s findings which showed a sustained increase in prices above inflation and increases in vet salaries. Between 2015 and 2023 the price of vet treatments increased by over 60% compared with general inflation of 35%, according to the CMA.
REMEDIES IN LINE WITH EXPECTATIONS
The proposed measures are broadly in line with expectations according to investment bank Jefferies, which said: ‘In all, our first review of the CMAs Remedies suggests few surprises versus our expectations, and we continue to view Pets at Home as well insulated from any likely impacts.’
The bank conceded that the potential requirement for vets to provide clear and accurate information about a range of treatment options could be ‘burdensome’ from an accountability and administrative perspective.
