The markets for veterinary services have concentrated in two leading chains owned by foreign private equity firms through mergers and acquisitions. This consolidation has also led to price increases. The Finnish Competition and Consumer Authority (FCCA) cannot intervene in the harmful concentration in the markets with its current tools.
The FCCA has investigated the competitive situation in the markets for veterinary services for pets and the effects of market concentration on the prices charged for the services.
“Households’ spending on veterinary and other pet services has doubled in ten years. In addition to the general rise in costs and advancements in veterinary medicine, market concentration and lack of competition have also contributed to the increasing costs.”
Harmful market concentration is prevented through merger control. In Finland, the rules on merger control only apply to transactions exceeding the turnover thresholds set out in the Finnish Competition Act.
Chains owned by foreign private equity firms control the markets
Formation of chains in the veterinary services markets began in Finland approximately 15 years ago when the first, mainly veterinarian-led chains were established. The entry of private equity investors into the markets in 2012 sparked a wave of acquisitions, resulting in significant market concentration in Finland.
Currently, the markets are controlled by two private equity-owned chains, Evidensia and Vireä. Vireä entered the markets in 2021. Evidensia has grown significantly in Finland over the past ten years by acquiring all other chains operating in the sector up to 2021. Vireä has also rapidly increased its market share by purchasing individual veterinary practices since its entry into the market.
The market concentration is a result of the typical buy-and-build strategies employed by private equity investors, where the market is concentrated by first acquiring a platform company and then expanding it by adding smaller companies. The goal is to increase the company’s value by leveraging economies of scale and synergies, as well as increased market power.
“Serial acquisitions by private equity firms are part of an efficient and functioning economy. The problem, however, is that the market can creepingly concentrate for one or a few players when merger control is not applicable to individual transactions due to the high turnover thresholds, even if tens or even hundreds of deals are made successively.”
Current legislation allows the markets to concentrate in two chains
Evidensia holds approximately 40–50% of the nationwide market for veterinary services for pets, while Vireä has a share of 10–20%. Locally, the market shares are significantly higher in many municipalities and regions. Markets are particularly concentrated in large cities; for example, in Helsinki and Espoo, Evidensia’s market share exceeds 60%. Evidensia also controls over 70% of the private pet hospital market.
“Our study shows that the competitiveness of the sector has significantly weakened as a result of acquisitions, especially in large cities and centers of population. In smaller localities, market being concentrated in a single local clinic is a natural consequence of the market’s small size,” notes Syrjälä.
Based on the FCCA’s findings, the trend of consolidation in the sector is likely to continue. Every fourth private veterinary clinic surveyed by the FCCA had been asked whether they would be interested in selling their business. Under the current merger control turnover thresholds, Evidensia and Vireä can acquire all other companies from the market except each other without the FCCA being able to investigate the acquisitions.
The acquisition of Omaeläinklinikka by Evidensia increased prices
The FCCA also examined the impact on prices of the 2021 acquisition of the then-runner up, Omaeläinklinikka, by the market leader Evidensia. The FCCA could not investigate the deal because Omaeläinklinikka’s turnover fell short of the then-applicable turnover thresholds.
After the acquisition, Evidensia’s prices rose by 28% between 2021 and 2024. This is approximately 15 percentage points higher than the average price increase in the sector or the general consumer price increase. The greatest price increases were seen in vaccinations, veterinary and nurse visits, and euthanasia.
“The phenomenon observed in private healthcare is now occurring in veterinary services. Prices of the acquired company have risen post-merger,” Aino Jankari states.
The authority’s study also found that companies incompletely disclose prices in online booking systems. This makes it harder for consumers to compare services and weakens price competition. To clarify practices, the Consumer Ombudsman published guidelines for the sector regarding price disclosure as part of the study.
The authority’s toolbox to prevent harmful concentration is deficient
Harmful market concentration occurring outside the reach of regulatory oversight is also present in private healthcare and the therapy and care sectors, as well as in digital services where markets can consolidate outside regulatory control.
“Concentration is rapidly increasing in many sectors, and it is not possible to effectively correct market structures afterwards. Finland should implement a call-in option for the competition authority as soon as possible, following the example set by other Nordic countries,” says Director Sanna Syrjälä.
The call-in option refers to the right of the competition authority to investigate acquisitions that fall below the turnover thresholds set out in the Competition Act in exceptional cases.
The call-in option has been implemented in several countries in recent years, including all Nordic countries and many other EU countries.
“In Finland, many markets are already below the EU average in terms of competitiveness due to our geographical location, small population, and long distances. It would be important that the tools available to safeguard competitiveness at least match those of other Nordic countries,” Syrjälä concludes.