(Alliance News) - CVS Group PLC and Pets at Home Group PLC on Tuesday pledged to work with the UK's competition watchdog after it launched a formal investigation into the veterinary sector, warning pet owners may be overpaying for medicines and prescriptions.
Shares in CVS Group, the Norfolk, England-based veterinary services provider slumped 22% to 1,140.00 pence each in London on Tuesday.
Shares in Pets at Home, the Wilmslow, England-based pet supply retailer fell 2.5% to 268.36p each in London on Tuesday. They traded as low as 252.20p in early exchanges.
The Competition & Markets Authority said an initial review of the sector, announced in September, had highlighted "multiple concerns" in the market.
These include concerns over the lack of information available to customers, weak competition in certain areas, actions by large corporate groups to reduce choice, and fears pet owners might be overcharged, the CMA stated.
"The regulatory framework is outdated and may no longer be fit for purpose," the CMA continued.
Sarah Cardell, chief executive of the CMA, said the initial review had drawn an "unprecedented response" from the public, showing the "strength of feeling on this issue is high".
"Our review has identified multiple concerns with the market that we think should be investigated further," she added.
As a result, the CMA has provisionally decided that it should launch a formal market investigation focused on its provisional findings.
A market investigation enables the CMA to investigate its concerns in full and to intervene directly in markets if it finds that competition is not working well, the regulator explained.
In response, CVS Group said it had engaged "constructively and proactively" with the CMA throughout its review.
CVS said it, along with certain other corporate groups who together own around 50% of first opinion practices in the UK, has put forward a package of possible remedies to address the CMA's concerns.
CVS said it believes this package could be adopted across the market and could address the CMA's concerns more quickly than an 18-month investigation.
The company pledged to work "proactively" with the CMA as the consultation progresses.
For its part, Pets at Home said it would "continue to cooperate" with the CMA, although it was "disappointed" that the CMA "fails to fully acknowledge the differences our differentiated model brings to our practice owners and consumers".
The company defended itself proclaiming its growth strategy is "pro-competitive, introducing new competition and consumer choice into the UK vet sector".
"We expect no impact on our growth strategy or ambitions where the strength of our consumer proposition is demonstrated by the high-quality growth the business is seeing", Pets at Home said.
By Jeremy Cutler, Alliance News reporter
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