FTC Sues to Block $3.5 Billion Veterinary Deal: Covetrus Bid for Rival MWI Said to Raise Costs for Clinics and Pet Owners
The Federal Trade Commission announced on November 13 that it sued to block Covetrus Inc. and its owners, Clayton, Dubilier & Rice LLC and TPG Inc., from acquiring its closest competitor, MWI Veterinary Supply Inc., for $3.5 billion from MWI's parent, Cencora Inc.
In its complaint, the FTC alleges the transaction would merge the two largest suppliers in the markets for veterinary clinic distribution and distribution to large corporate accounts, drive up costs for veterinary clinics, decrease service quality and increase prices for pet owners.
Covetrus and MWI supply veterinarians with pharmaceuticals, vaccines, gloves, gauze, syringes, surgical supplies and thousands of other products and associated services. Their customers range from independent, single-veterinarian practices to large corporate accounts with hundreds of clinic locations across the United States, and both operate national networks of distribution centers, according to the complaint.
"Veterinarians and millions of American pet owners benefit when veterinary distributors compete by offering lower prices and better service. This transaction will reduce competition in an already concentrated market and drive up prices for veterinarians and their customers," said Daniel Guarnera, director of the FTC's Bureau of Competition. "These two companies are engaged in fierce head-to-head competition, and Covetrus wants to eliminate its closest competitor rather than compete for veterinary clinic customers."
The FTC said years of head-to-head competition, intensified by the online price-comparison platform Vetcove, has amounted to an all-out price war, and that structural barriers make it difficult for new competitors to enter. The combination would result in highly concentrated markets, rendering the transaction presumptively unlawful under current antitrust case law and the FTC and Justice Department's joint merger guidelines, according to the complaint.
The Commission voted 2-0 to authorize staff to seek a permanent injunction. The complaint was filed in the U.S. District Court for the Southern District of New York and is joined by the attorneys general of Arizona, Arkansas, California, Colorado, Maine, Michigan, Minnesota, Nebraska, New York, North Carolina, Ohio, Oregon and Texas.
(Source: U.S. Federal Trade Commission)
Source: U.S. Federal Trade Commission
Published by GSM · USA (original Chinese edition)
Photo: 图：位于华盛顿的美国联邦贸易委员会总部大楼。Gryffindor 摄，公共领域，经 Wikimedia Commons。 / Photo: Federal Trade Commission headquarters in Washington, D.C. By Gryffindor, public domain, via Wikimedia Commons.
