Proactive Investors - A competition probe into Britain’s veterinary market is unlikely to hit CVS Group (LON:CVSG) and Pets at Home Group PLC (LON:PETSP) as hard as feared, analysts have reassured.
The Competition and Markets Authority would likely look to enforce more transparency, rather than taking drastic measures such as forcing disposals and capping product prices, Liberum analysts said in a note.
“The main remedies are likely to be around information disclosure and there is nothing to stop the industry adopting those changes ahead of time,” the bank reassured, having interviewed the regulator’s ex-legal head, Tom Smith.
“The read across for CVS is perhaps less significant than one might have thought and contrary to some commentators, we don’t think that CVS is dead money.
“For Pets at Home, the impact is likely to be negligible with its differentiated model insulating it to a large degree.”
Britain’s CMA launched an investigation into the pet medicines and treatment market last month, warning owners were often uninformed on pricing and could be overpaying as a result.
AIM-listed vet service provider CVS Group took a hit on the news, having responded saying it had already proposed a “package of possible remedies” to the CMA.
Pets at Home assured the investigation was unlikely to find it at fault meanwhile, since the retailer’s sites run as joint ventures and are independently responsible for pricing.
Liberum, quoting Smith, argued that competition concerns were likely more a result of consumers not shopping around, given the often stressful nature of seeking pet care.
“If your dog is sick, you just want to get it sorted out,” as per Smith, “you don't want to go and shop around at four different vets to get different prices”.
Remedies are likely to tackle the lack of information on rival services and products, therefore, as per Liberum.
CVS climbed 2.4% to 967p on the news, while Pets at Home gained 1.1% to reach 268.59p.