Clydesdales.

CORPORATE VETERINARY MONOPOLIES

 

 

 

Anti-Trust regulators, created to protect the public interest, frown on monopolies or any attempts to create them. There are several reasons why monopolies are not considered beneficial to the public they serve. Firstly, the large and often deep pocketed company trying to create a monopoly in a particular area often sets prices below cost, until the local competition is eliminated. This can entail significant job losses and economic pain in the particular geographical area concerned. Once rivals are driven from the industry by this method or they are alternately bought out, the company holding the monopoly then inevitably raises its prices to quickly recoup any losses its initial pricing policy may have generated. Costs for consumers then typically rise beyond the base price that existed before the monopoly was created. Secondly, when a company has created a monopoly for itself, it often wields significant influence and power in the political and regulatory agencies that control its industry. In many cases management from the monopoly company actively encourages its members to join the regulatory agencies that decide policy that might affect its operations. Additionally, wages for the employees of a monopoly company also tend to get reduced, as the opportunities for its workers in that same field become limited or non-existent in the local area. The quality of the services provided by companies in monopoly situations also tends to suffer as there is no real economic incentive for them to maintain excellence standards when there is no competition. 

 

Monopolies can exist in veterinary medicine just as in any other industry. In 2017, the merger of MARS and VCA caught the attention of the US Federal Trade Commission (FTC) which deals with Anti-Trust conflicts. After reviewing the details of the merger the FTC announced its decision. It ruled that it had reason to believe that both companies had violated two Federal Acts that govern mergers and as a result, as part of a Consent Agreement, it ordered MARS and VCA to divest themselves of twelve specialty or 24-hour emergency centres to competitors. At the time of the VCA purchase, MARS owned numerous 24-hour emergency and specialty veterinary referral centres that operated under the banner of either Banfield Pet Hospitals, Blue Pearl or Pet Partners. The FTC decision stated the Divestiture was required not only to ensure choice for the public but it was also done to try and minimize the price increases that typically occur when consolidation results in a local monopoly. That decision while welcome however, made no comment regarding the issue of possible monopolies in the area of general veterinary practice, despite the fact that almost 2000 such general practices were controlled by MARS, following its purchase of VCA. It also failed to look at how VCA’s Antech Diagnostic Laboratory Service might offer MARS considerable advantages over its competitors in various markets. Instead the FTC focused in its decision solely on the 24-hour emergency and specialty hospitals owned by either MARS or VCA. 

 

Since the VCA purchase, MARS has, in June 2018, expanded further into the pet care field with the purchase in the UK of the veterinary clinic chain, Linnaeus Group Ltd and in Europe with the purchase of Anicura. 50,000 employees of MARS' now work in the pet care world and they constitute over one third of the company's entire workforce. This likely indicates where MARS considers much of its future revenue growth will come from. 

 

Unlike in the USA, the Competition Bureau, which is Canada's anti-trust watchdog reviewed the February 2017 MARS purchase of VCA, but made no recommendations about the need for the combined entity to divest any clinics in this country. This may reflect the fact that while VCA was the main owner of corporately run practices in Canada at the time of the merger, it only controlled a relatively small number of general veterinary practices overall. However, with regards its ownership of 24-hour emergency and specialty referral centres in both Edmonton and Calgary, VCA is close to a monopoly situation. Despite this, there has been no comment publicly by the Competition Bureau here in Canada about this situation and the effect it is having on the cost to consumers of accessing specialty, emergency, or out of hours pet care in Alberta's major urban centres. Apart from its operations in Alberta and British Columbia, VCA has also expanded its Canadian operations by opening facilities in Saskatchewan, Quebec and Ontario, especially in and around the greater Toronto area. 

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