CVS Group (AIM:CVSG) has said proposals are already available to address competition concerns in Britain’s veterinary sector after news of a probe stripped a quarter from its value on Tuesday.
Pets at Home Group PLC (LSE:PETS), which was also dragged lower by the news of the regulatory investigation, argued the issues involved did not relate to its own business model.
Each company commented after the Competition and Markets Authority said pet owners were often uninformed about pricing and could be left overpaying for medicines.
Such concerns meant it was launching a formal market investigation into the sector, the CMA announced, with the duo among just six companies to own 1,500 of the UK’s 5,000 veterinary practices.
CVS responded saying a “package of possible remedies” had already been put to the CMA to address concerns.
These, it argued, could address issues “more quickly than an 18-month investigation,” adding work would continue with the CMA until the ongoing consultation closes in April.
“We look forward to the CMA announcing a further update subsequent to that,” the group added.
“At first glance [it’s] not great news for CVS, as it extends an already lengthy period of uncertainty,” Liberum analysts noted following the news.
That said, most of the outcomes of the investigation will likely surround transparency, the bank said, adding CVS shares were unlikely to dip much further given risks were now already priced in.
On Pets at Home, analysts said the group was relatively well positioned since its vet practices are run as joint ventures, with pricing decisions made independently.
Pets at Home highlighted this model, commenting that the CMA’s concerns did “not fully reflect” its business.
“They choose all pricing, products and services to ensure the best care for clients and their much-loved pets in their local area,” the FTSE 250-listed firm said.
“[This] promotes competition in the market and helps to keep prices low,” it added.
“We have been working closely with the CMA on their areas of concern and will continue to do so as their inquiry progresses to ensure the distinctiveness of our model is fully recognised.”
CVS fell 24.4% to 1,102p on the news, while Pets at Home dipped 3.2% to 266.4p.