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The �鶹��ý Trade Commission today took the second action against JAB Consumer Partners to prevent the private equity firm from further consolidating control over specialty and emergency veterinary clinics. As a condition of JAB’s proposed $1.65 billion acquisition of the parent company of veterinary clinic owner Ethos, the FTC is ordering the firm to divest clinics in Richmond, Va., Denver, San Francisco, and the Washington, D.C area. The Commission also is imposing strong prior approval and prior notice requirements on both JAB and its divesture buyers for future acquisitions of specialty and emergency veterinary clinics.

“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,” said Holly Vedova, Director of the Bureau of Competition. “Divestitures will help preserve current competition, and the prior notice and approval requirements will allow the FTC to keep a close watch on these markets moving forward.”

Pet owners rely on emergency clinics when they need care at all hours, including when general practice veterinarians are closed. They rely on specialty veterinarians for services that are beyond those typically offered by general veterinarians, such as internal medicine, neurology, medical oncology, critical care, ophthalmology, and surgery.

JAB is the parent company of two firms that operate chains of veterinary clinics providing general, specialty, and emergency care – Compassion-First Pet Hospitals and National Veterinary Associates, Inc. Ethos owns and operates specialty and emergency veterinary clinics in nine states.  

According to the complaint, this deal is part of a growing trend towards consolidation in the emergency and specialty veterinary services markets across the United States in recent years by large chains, including JAB, which regularly monitors local markets throughout the United States in contemplation of continued growth through potential small and large acquisitions of specialty and emergency clinics. Earlier this month the FTC ordered JAB to divest clinics in California and Texas as a condition of its proposed $1.1 billion acquisition of another competing clinic operator, SAGE Veterinary Partners, LLC. Just two years ago, the FTC ordered divestitures to remedy another illegal acquisition by JAB – the $5 billion purchase of NVA.

The complaint alleges that as originally proposed, the acquisition is likely to be anticompetitive in four geographic markets for various types of veterinary care:

• In and around Richmond, Virginia, for medical oncology veterinary specialty services;
• In and around the Washington, DC Metro Area, for medical oncology veterinary specialty services;

• In and around Denver, Colorado, for internal medicine, neurology, medical oncology, critical care, surgery, radiology, cardiology, dermatology, and anesthesiology veterinary specialty services and emergency veterinary services; and

• In and around San Francisco, California, for internal medicine, neurology, medical oncology, critical care, ophthalmology, and surgery veterinary specialty services and emergency veterinary services

According to the complaint, these markets are highly concentrated, and the acquisition would substantially increase concentration in all of them. In one market, the combined firm would be the only provider following the transaction. In other markets, the combined firm would be one of only a few alternatives for consumers.

The consent agreement settling the FTC’s complaint against JAB and its subsidiaries requires them to:

• Divest assets: JAB must sell five clinics to two divestiture buyers–United Veterinary Care, LLC, and Veritas Veterinary Partners–no later than 10 days after its acquisition of Ethos is consummated. The three clinics to be divested to United Veterinary Care include The Oncology Service-Richmond in Richmond, Virginia, as well as the Oncology Service-Springfield, and the Oncology Service-Leesburg in the DC Metro area. The two clinics to be divested to Veritas include Wheat Ridge Animal Hospital in the Denver, Colorado area, and Pet Emergency + Specialty Center of Marin near San Francisco. Divestiture of these assets includes any relocation or expansion of facilities.  

• Seek prior approval: JAB must obtain the Commission’s prior approval before acquiring a specialty or emergency veterinary clinic within 25 miles of any existing or future JAB-owned clinic anywhere in California, Colorado, District of Columbia, Maryland, and Virginia for 10 years.

• Comply with the prior notice requirement: The company must also notify the FTC in writing 30 days prior to acquiring any specialty or emergency veterinary clinic within 25 miles of a clinic owned by JAB anywhere in the United States that otherwise is not required to be reported under the Hart-Scott-Rodino Act for 10 years.

The proposed order also requires divestiture buyers United Veterinary Care, LLC, and Veritas Veterinary Partners to obtain prior approval from the Commission before transferring any of the divested assets to any buyer for 10 years after acquiring the divestiture assets, except in the case of a sale of all or substantially all of the company’s business.

Further details about the order, including the appointment of a monitor to oversee compliance, can be found in the analysis to aid public comment.

 The Commission vote to issue the complaint and accept the proposed order for public comment was 5-0. The FTC will publish the consent agreement package in the shortly. Instructions for filing comments appear in the published notice. Comments must be received 30 days after publication in the �鶹��ý Register. Once processed, comments will be posted on .

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $46,517.