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Investing.com -- Shares of CVS Group Plc (LON:CVSG) jumped more than 12% Thursday after the UK’s Competition and Markets Authority said it would not require divestments in the veterinary sector, a key outcome from its ongoing market review.
The CMA’s remedies consultation document outlined 28 possible actions aimed at improving competition, but stopped short of recommending any enforced asset sales.
Analysts at RBC Capital Markets said this removes a significant overhang for CVS, which has faced scrutiny over market concentration in recent months. The regulator instead focused on transparency, pricing, and workforce changes.
The CMA proposed limited pricing controls, particularly targeting commonly used veterinary medicines. It described these measures as interim and narrow in scope.
One example included capping the maximum price of a medicine by 5% compared with mid-2024 averages.
RBC analysts estimate that pharmaceuticals contribute about 25% of CVS’s revenue and 30% to 35% of its EBITDA, making the pricing proposals notable but manageable.
The consultation also includes measures to standardize pricing for services and pet care plans, potentially enabling direct comparisons through price comparison websites. While this could shift consumer behavior, the changes are expected to take time to implement.
Other potential remedies include reducing switching costs for out-of-office service providers and placing limits on cremation fees.
However, RBC noted these are of limited relevance to CVS following the company’s sale of its crematorium division.
A more crucial operational change could come from the CMA’s support for expanding the role of veterinary nurses.
The proposal would allow vet nurses to take on a broader range of responsibilities, offering more flexibility in how practices are staffed and managed. RBC analysts said this development could benefit all veterinary providers, including CVS.
The CMA also outlined possible regulatory reforms to give the agency stronger enforcement powers.