FTC Building

Photo courtesy of the FTC

The Federal Trade Commission in Washington, D.C., is intervening in mergers involving veterinary hospitals due to competition concerns.

National Veterinary Associates has been ordered to sell more hospitals in the United States, in a further sign that regulators are increasingly uncomfortable about the concentration of ownership in the profession, particularly in emergency and specialty practice.

The Federal Trade Commission said today it told the corporate consolidator, owned by German private-equity investor JAB, to sell five clinics — two near Washington, D.C.; one in Richmond, Virginia; one near Denver; and one near San Francisco.

NVA has agreed to the sales as a condition of the FTC's approval of its $1.65 billion acquisition of Ethos Veterinary Health, which owned 23 specialty and emergency hospitals when the deal was announced last year.

The latest intervention comes 16 days after the FTC said it told NVA to sell six specialty and emergency clinics in California and Texas to get approval for its $1.1 billion acquisition of Sage Veterinary Centers, also announced last year.

"For the second time in a month, the FTC is taking action to prevent private equity firm JAB from gobbling up competitors in regional markets that are already concentrated," Holly Vedova, director of the Bureau of Competition, said in a statement.

Once again, Florida-based United Veterinary Care appears to have benefited from the regulator's involvement, at least in terms of its growth aspirations. It will acquire three Oncology Service-branded hospitals from NVA — in Richmond, Springfield and Leesburg, Virginia (the latter two in the D.C. metropolitan area). Those three assets will add to the six it acquired as part of the Sage intervention. United has practices at 109 locations, according to its website.

The other two practices NVA must divest are going to New Jersey-based Veritas Veterinary Partners. They are Wheat Ridge Animal Hospital near Denver; and Pet Emergency + Specialty Center of Marin, near San Francisco. Veritas owns five practices and has another two "coming soon" in New Jersey, according to its website.

As it did with the Sage intervention, the FTC also has imposed a prior-approval condition on NVA, compelling it to receive regulatory approval before it acquires any specialty or emergency veterinary clinic within 25 miles of an existing or future JAB-owned clinic in California, Colorado, D.C., Maryland and Virginia for 10 years.

Another condition imposed by the FTC in the Sage approval is that NVA must notify the agency in writing 30 days prior to acquiring any specialty or emergency veterinary clinic within 25 miles of a JAB-owned clinic anywhere in the U.S.

Spokespeople for NVA and JAB didn't immediately reply to a request for comment.

The FTC has now intervened three times in deals involving JAB, which agreed in 2020 to divest three specialty and emergency centers to win approval for its merger of NVA with Compassion First. NVA owns more than 100 speciality and referral centers in the U.S. and more than 1,400 veterinary clinics globally, according to its press releases.

Mars Inc., America's biggest corporate consolidator ahead of NVA, was targeted by the regulator in the past. In 2017, it agreed to divest 12 specialty and emergency centers to gain approval of its $9.1 billion acquisition of VCA.

The FTC's latest intervention, combined with United Kingdom regulators' recent blocking of two mergers involving general practices across the Atlantic, demonstrates that antitrust regulators are more closely scrutinizing deals across a veterinary sector that, over the years, has been become more concentrated, a trend that's accelerated during the Covid-19 pandemic.