In early August, IVC – the UK’s largest vet practice chain – announced its purchase of Scarsdale Vets, a 13 practice chain based in Derby and the surrounding area. Aldwych Partners has previously written about emerging competition risks for vet sector consolidators like IVC, and this transaction again shows the potential for CMA intervention in the sector.
In Derby, IVC has added Scarsdale’s six practices to the two it already owns (see map below), and now controls 8 out of 18 practices in the Derby LA area, with another Scarsdale practice not far away.
A key issue for the CMA in deciding whether aggregation at this level is a problem for customer choice and competition is how far customers travel to see their local vet. However, assuming the Derby LA area is a reasonable approximation of the relevant geographic market, then IVC now owns around 45% of all vet practices in this market. This is a little above the CMA’s typical 40% threshold for concerns about a merger’s effect on competition. At the same time, however, Derby’s pet owners still have the choice of 10 or so other vet practices in the LA area, including two owned by Pets at Home.
In Burton-upon-Trent, IVC now owns four vet practices out of eight in the town (see map below), having added the two Scarsdale practices to its existing two. Its 50% share of practices might be enough to trigger CMA concerns, but at the same time, Burton pet owners have four other practices to choose from.
Factors such as differentiation between vet practices (e.g. small animals vs equine vs farm) also have the potential to affect customers’ ability to choose between vet practices, so some care needs to be taken when looking at overall vet practice numbers in any local market. Nevertheless, from this (admittedly long-range) distance it looks as though IVC has kept its market share in both Derby and Burton at a level that should allow it to keep all of the practices it has just bought if the CMA does decide to take an interest.