Introduction
On Tuesday 18 November, Rachel Reeves wrote to the UK’s Competition and Markets Authority (CMA) asking it to launch a study into the private dental care market. The Chancellor has asked the CMA to consider, in particular, the effectiveness of competition between private dentists, including at local level, as well as whether consumers can make effective choices and obtain value for money.
In response, the CMA has indicated that it is already carrying out “initial exploratory work” to assess the merits of a study in this area and will develop a proposal to put to its board.
CMA market studies and Investigations
Market studies are one of a number of tools available to the CMA to address competition and consumer protection concerns, alongside its competition enforcement and merger control powers. A market study is used to examine why a particular market may not be working well for consumers. Outcomes can range from a clean of bill of health, to recommendations for legislative changes, or escalation to a market investigation – a more detailed and onerous investigation with greater remedial powers available to the CMA.
A well-trodden path? The veterinary services market investigation
The Chancellor’s intervention follows the CMA’s (ongoing) market investigation into veterinary services, a market similarly characterised by large-scale corporate ownership. The CMA issued its provisional decision in October this year, with the final report due next Spring.
The CMA’s examination of the sector began in 2023 when it issued a call for information (CFI) which generated an unprecedented 56,000 responses from the public, vets, and other stakeholders. The CFI was itself preceded by a series of CMA merger reviews in the sector (all requiring divestments) and growing concern about private equity roll-ups.
In its provisional decision, the CMA has identified “significant” and “widespread” problems, indicating the market is not working well. It has found that between 2016 and 2023, average prices at veterinary practices rose by 63%, with little corresponding increase in costs to justify this. It has also found that pet owners lack clear information to make choices between different practices, treatment options and options for purchasing medicines.
The CMA has proposed extensive remedies: 21 in total. These include:
- Information remedies including e.g. mandating the publication of price lists and disclosure of practice ownership;
- A cap on prescription fees; and
- Regulatory reform, so the relevant regulator can regulate veterinary groups as well as the professionals they employ.
What lessons can be learned from Vets?
We expect the CMA to adopt a similar approach to that in Vets: the specific areas the Chancellor has asked the CMA to consider in respect of private dental care are closely aligned with those looked at in Vets.
For dental groups, the priority will to be able to clearly evidence why any identified concerns are unfounded and present a strong positive case on how and why growth in private dental groups has generated pro-competitive outcomes. In Vets, the large vet groups put forward arguments to explain price increases (e.g. corresponding investments, improvements in quality etc.) but the CMA, on the whole, found these were not borne out by the evidence (including the parties’ internal documents).
As with prior studies, an entirely clean bill of health seems unlikely but steering the CMA towards informational remedies which give customers greater control and choice – rather than more onerous remedies like price controls or divestments – will be key.
What can you do now to prepare?
There are several practical steps you can take now to prepare:
- Prepare for early engagement. Whether the CMA initiates a market study or a “review” (as in Vets), early and proactive involvement will be essential. As with Vets, we anticipate significant interest in any CMA work in this sector and engagement from a wide range of stakeholders.
- Consider what internal resource and support you will need to engage quickly and respond effectively to the CMA’s preliminary work.
- Start thinking about your “positive case” now, highlighting the key benefits your group brings to the sector, and how you can back up that story with evidence and internal documents.
- Remember, competition scrutiny in this space may extend beyond any study. The Chancellor’s intervention ensures private dental care remains firmly on the agenda for the CMA. As with Vets, we expect the CMA will continue to actively monitor merger activity in this sector.
- Consider seeking external support—our team has extensive experience advising on recent market studies and investigations, as well as supporting private equity clients through CMA processes.
