Shares in household pet companies CVS Group and Pets at Home fell on Thursday as the CMA launched a review into the veterinary services market.
CVS shares were down around 29% while Pets at Homes shed 9%.
CVS Group issued a statement in response to the review which touched on the inflationary pressures facing the industry:
Our purpose at CVS is to give the best possible care to animals and we continually invest in our colleagues, practices and clinical equipment to enhance the care to our clients and their patients. The Group has always sought to ensure its prices are appropriate and reflect fair value to our clients. Our pricing structures are set by clinicians to ensure these align with our purpose.
As the CMA have recognised, there continues to be a significant shortage of vets in the UK and employment costs represent the most significant proportion of our cost base. Our pricing reflects this and other inflationary pressures experienced in recent years.
The CMA said they would be reviewing whether vet’s bills had grown faster than inflation and indicated they were concerned about large groups owning hundreds of practices and reducing competition. In a statement, the CMA said people may be unaware their vet is owned by a larger group owns other vets in the same area.
The CMA will provide an update on the review in early 2024.
“Being in the pets and vet space has felt like a healthy place to be in recent years. That’s been reflected in strong share prices for the likes of vet group CVS and Pets at Home which has its own veterinary arm within a broader retail and grooming offering,” said Russ Mould, investment director at AJ Bell.
“Britons love their animal companions and are willing to pay up to keep them healthy and happy.
“News that the competition authorities are looking into the rising costs and potentially anti-competitive practices in the industry has set the cat among the pigeons when it comes to the share prices of CVS and Pets at Home.
“The sell-off seen today could be an overreaction, although the CMA review looks to be wide-ranging. The problem for both businesses is the process is likely to be time-consuming and, with a further update not due until early 2024, it could weigh on both stocks for some time to come.”