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The �鶹��ý Trade Commission today took action to protect competition in markets for specialty and emergency veterinary services by requiring the owner of a chain of veterinary clinics, JAB Consumer Partners, to divest clinics in California and Texas as a condition of its proposed $1.1 billion acquisition of competing clinic operator SAGE Veterinary Partners, LLC. The Commission also is imposing robust prior approval and prior notice requirements on JAB’s future acquisitions of specialty and emergency veterinary clinics.

Under the FTC’s order, JAB must obtain the Commission’s prior approval before acquiring a specialty or emergency veterinary clinic within 25 miles of any then-owned JAB-owned clinic anywhere in California or Texas. 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.

“Private equity firms increasingly engage in roll up strategies that allow them to accrue market power off the Commission’s radar,” said Holly Vedova, Director of the Bureau of Competition. “The prior notice and approval provisions will ensure the Commission has full visibility into future consolidation and the ability to address it.”

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. SAGE Veterinary Partners owns and operates 16 veterinary clinics offering specialty and emergency care in Texas, California, Washington, and Alaska.

Pet owners rely on emergency clinics when they need care at all hours, 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.

The complaint alleges that as originally proposed, the acquisition is likely to be anticompetitive in three geographic markets for various types of veterinary care in Texas and California.

• In and around Austin, Texas, for internal medicine, neurology, medical oncology, critical care, and surgery veterinary specialty services, as well as emergency veterinary services would be harmed by the acquisition.
• In and around San Francisco, California, for internal medicine, neurology, ophthalmology, and surgery veterinary specialty services, as well as emergency veterinary services would be harmed.
• In and between Oakland, Berkeley, and Concord, California, for  internal medicine, medical oncology, and surgery veterinary specialty services, as well as emergency veterinary services would be harmed.

All of these markets are highly concentrated, and the acquisition would substantially increase concentration in each market, leaving the combined firm as the only provider in some markets, and one of only two providers in other markets.   

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

• Divest assets. JAB must sell six clinics to divestiture buyer United Veterinary Care, LLC, no later than 10 days after its acquisition of Sage is consummated. The divested clinics include three SAGE facilities in Austin, Texas, and three clinics operated by a subsidiary of JAB located in San Mateo, Berkeley, and Fairfield, California.

• Seek prior approval for an acquisition of a specialty or emergency veterinary clinic located within 25 miles of a JAB-owned veterinary specialty or emergency clinic, for the states of California and Texas.

• Provide the Commission with prior notice for an acquisition of a specialty or emergency veterinary clinic located within 25 miles of a JAB-owned veterinary specialty or emergency clinic, for the entire United States.

• Comply with the prior notice requirement on a nationwide basis and the prior approval requirement in Texas and California for 10 years.

The proposed order also requires divestiture buyer United Veterinary Care, LLC, 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. Chair Lina M. Khan issued a statement joined by Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya. Commissioners Noah Joshua Phillips and Christine S. Wilson also issued a statement. 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.