18th Feb 2022 09:17
(Alliance News) - CVS Group PLC on Friday said the UK competition regulator has decided that its takeover of Quality Pet Care Ltd may have reduced competition in five locations.
Quality Pet Care was bought by CVS in August last year for GBP20.4 million. The Woking, England-based business owns eight veterinary practices across the UK. Norfolk-based CVS, on the other hand, owns 506 veterinary practices in the UK, Ireland and Netherlands.
CVS on Friday noted the UK Competition & Markets Authority thinks the deal "may have resulted in a substantial lessening of competition" in Bristol, Nottingham, Portsmouth, Southampton and Warrington after completing a phase one investigation into the takeover.
CVS, while disappointed, said that it has "good grounds" to believe that the decision would be overturned should the company commit to a phase two investigation.
It continued that it would review the decision in detail before deciding on a course of action.
"The board believes that this is the first case in which the CMA has assessed local competition in the veterinary sector. While we recognise that the CMA will assess each case on its merits, we nonetheless believe that the understanding gained as to the basis of assessment used by the CMA in this particular case will be helpful in the group's own appraisal of a number of future acquisition opportunities in the UK," CVS stated.
The CMA said that its investigation found that the combined businesses would account for a "significant proportion" of veterinary services in each of the five areas it has raised. The watchdog noted that this could lead to pet owners facing a worse quality of service, including more limited treatment options, or having to pay higher prices.
"The CMA has received a number of complaints in recent years about higher prices or lower quality services as a result of too many vets' practices in the same area being under the control of a single company," Colin Raftery, senior director of Mergers at the CMA, said.
"This deal could lead to customers facing more limited treatment choices for their pets or paying over the odds for services in these areas. Should CVS fail to address our concerns we will refer the deal for an in-depth investigation."
CVS shares were trading 2.1% lower in London on Friday morning at 1,833.98 pence each.
By Abby Amoakuh; [email protected]
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