Global antitrust enforcers place private equity healthcare deals in the spotlight
Recent enforcement activity from the UK’s Competition and Markets Authority (CMA) – as well as from antitrust enforcers in the US, Canada, and Europe – has demonstrated an uptick in investigations related to private equity deals within the healthcare and veterinary spaces.
Below, we take a closer look at these enforcement developments from across the globe.
CMA’s veterinary sector inquiry
The Competition and Markets Authority (CMA) has announced a formal market investigation into the UK veterinary services sector. Private-equity roll-ups in the veterinary sector are of concern for British enforcers because consolidation can, the CMA says, “potentially lead[] to reduced choice, higher prices, lower quality and exit of independent competitors.” The CMA also noted that its initial vet sector review prompted over 50,000 responses from the public and the vet sector.
In announcing the inquiry, the CMA expressed concern about private equity ownership in the UK veterinary sector. The CMA highlighted that market concentration has increased over the past decade from 10 percent to now 60 percent of UK vets practices belonging to large corporate groups, which “may have incentives to act in ways which reduce choice and weaken competition.”
In launching their investigation, the UK enforcers remarked how it called in for review large corporate vet group acquisitions between 2021 and 2023, and concluded they raised anticompetitive concerns. The CMA has floated remedies such as divestment, price caps, and updated regulations to reset the British vet sector.
This is not the first time the CMA has raised competition concerns about private equity roll-ups. UK enforcers previously investigated private equity acquisitions in the dental sector, here and here.
Heightened global scrutiny of PE healthcare transactions
The investigation comes on the heels of the Federal Trade Commission (FTC), Department of Justice, and US Department of Health and Human Services’ announced joint public inquiry into private capital’s impact on healthcare in the US. In a March 5, 2024 speech, FTC Chair Lina Khan expressed concern that “in the aggregate, these roll-up plays can eliminate meaningful competition and allow new owners to jack up prices, degrade quality, and neutralize rivals without competitive checks.”
Khan’s comments echo the new 2023 Merger Guidelines jointly issued by FTC and the US Department of Justice’s Antitrust Division, which state that “the Agencies will consider individual acquisitions in light of the cumulative effect of related patterns or business strategies.”
Paralleling the CMA’s formal market investigation, the FTC also is active in policing perceived consolidation of specialty and emergency vet clinics in the US. In fact, it has already taken enforcement action. In 2022, the Commission ordered a private equity firm to divest veterinary clinics as a condition of an acquisition of a proposed acquisition. The final consent decree mandated prior approval and prior notice requirements as a condition for any future acquisitions in the space.
In continental Europe, the Authority for Consumers and Markets, the Dutch competition authority, has also expressed concern for private equity roll-ups in the veterinary and healthcare sectors.
And, while no action has been taken yet, Canada’s Commissioner of Competition Matthew Boswell remains “wise to the risks of creeping acquisitions—including private equity roll-up strategies—and the harm they may pose to competition.”
Going forward
DLA Piper’s global Antitrust and Competition and Private Equity teams work closely to develop and implement strategies to navigate this heightened scrutiny of private equity investments in the healthcare industry, both stateside and abroad.
