FTC Blocks JAB Consumer Partners Veterinary Clinic Roll-Up: Private Equity Monopolization Strategy

The Federal Trade Commission ordered private equity firm JAB Consumer Partners to divest veterinary clinics in four metropolitan areas as a condition of its $1.65 billion acquisition of Ethos Veterinary Health, citing concerns about JAB’s roll-up strategy creating local monopolies in specialty and emergency veterinary care. The FTC also imposed strong prior approval and prior notice requirements on future veterinary acquisitions, marking aggressive action against private equity’s systematic use of serial acquisitions to build monopolies in fragmented healthcare sectors.

The FTC action targeted JAB’s strategy of rapidly acquiring veterinary clinics to build market power in local geographic markets. JAB Holding Company already owned National Veterinary Associates (NVA) with 1,400+ veterinary hospitals and had previously acquired Compassion-First Pet Hospitals for $1.2 billion in February 2022. The proposed Ethos acquisition would have given JAB control over a dominant share of specialty and emergency veterinary services in Richmond VA, Denver, San Francisco, and the Washington D.C. area.

The FTC’s consent order required JAB to divest clinics to restore competition in these concentrated markets and imposed unprecedented ongoing oversight of JAB’s veterinary acquisitions. The order required JAB to obtain FTC approval before any future acquisition of veterinary practices—an extraordinary restriction recognizing the systematic nature of private equity roll-up strategies.

The veterinary industry has undergone massive private equity consolidation over the past decade, with corporate and private equity ownership increasing from less than 10% of clinics in the early 2010s to an estimated 30-50% by 2024. For specialty and emergency care, corporate ownership exceeds 75% of practices. This rapid consolidation has enabled dramatic price increases—up to 100% for routine services in some markets—while reducing competition and service quality.

The private equity roll-up strategy works by:

1. Identifying fragmented industries with many independent practitioners (veterinary, dental, dermatology, ophthalmology, etc.)
2. Rapidly acquiring numerous practices in geographic markets using leveraged buyouts
3. Often keeping original practice names to hide corporate ownership from consumers
4. Achieving local market dominance before regulators notice the accumulation
5. Using market power to raise prices, reduce service quality, and extract maximum revenue
6. Loading acquired practices with debt and extracting dividends

Fewer than 15% of corporate consolidators brand their acquired practices, leaving consumers believing they patronize independent local practices while actually paying monopoly prices to private equity firms. Pet owners often discover corporate ownership only when receiving dramatically increased bills for previously routine services.

The FTC noted that “unchecked roll-ups could significantly diminish local competition in emergency and specialty veterinary care.” The order was designed to prevent JAB from continuing to acquire veterinary practices in concentrated markets without regulatory review, addressing the structural problem of serial acquisitions that individually seem small but collectively create monopolies.

Similar private equity roll-up strategies have consolidated other healthcare sectors:

• Dental: Aspen Dental (1,000+ locations) owned by Leonard Green & Partners and Ares Management has paid $1.7 million in settlements for deceptive practices while extracting $1.1 billion in debt-funded dividends. 27 of the top 30 dental service organizations are private equity-owned.

• Dermatology, ophthalmology, gastroenterology: Studies show private equity takeovers increase costs by $71 per medical claim and produce 9% increases in lengthy, costly patient visits.

• Physician practices: Private equity has systematically acquired practices in specialties including emergency medicine, anesthesiology, radiology, and hospitalist services.

The American Economic Liberties Project has recommended finalizing proposed revisions to the Hart-Scott-Rodino Act to ensure regulators can identify and stop serial acquisitions before they create unassailable monopolies. Current merger reporting thresholds miss many small acquisitions that collectively build monopoly power.

The JAB veterinary case represents the FTC’s growing recognition that private equity roll-up strategies pose systematic antitrust threats requiring aggressive enforcement, ongoing monitoring, and structural remedies beyond single-transaction review. However, critics argue the FTC action came too late, after private equity had already captured majority control of specialty veterinary care, and that similar roll-ups continue unchecked in dental, dermatology, and other healthcare sectors.