Recent Acquisition Spurs Lawsuit Against PetIQ

Earlier this year, PetIQ announced its acquisition of VIP Petcare and plans to open more than 1,000 veterinary clinics in retail-partner locations, including Walmart. Now, two wholesale distributors have filed a lawsuit in response.
Amanda Carrozza
Published: April 23, 2018
PetIQ lawsuitA lawsuit has been filed against PetIQ Inc. — a pet medication and wellness company — on behalf of veterinary medication distributors Med Vets Inc. and Bay Medical Solutions Inc., alleging an unlawful merger and other antitrust violations. 

The lawsuit is in response to PetIQ’s acquisition of Community Veterinary Clinics LLC, dba VIP Petcare, an operator of community veterinary clinics and wellness centers within major U.S. pet retail stores. The $220 million transaction, announced in January, was anticipated to strengthen PetIQ’s ability to develop new retail customers and grow its market from $8.6 billion to more than $29 billion.

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In March, PetIQ announced plans to open more than 1,000 veterinary clinics in different retail-partner locations through 2023, including Walmart. By the end of June 2018, 20 veterinary clinics are expected to open in different Walmart locations.

“I am incredibly proud of our team who, in a very short period of time, has leveraged our cross-functional capabilities to introduce our first VetIQ Petcare clinics,” PetIQ Chairman and CEO Cord Christensen said at the time of the announcement. “We are excited to provide pet parents and their pets a unique experience in conjunction with our retail partners.”

The lawsuit was filed earlier this month in the US District Court for the Northern District of California. In the suit, the complainants claim PetIQ’s acquisition will harm competition in the wholesale markets for prescription and restricted pet parasiticides by allowing manufacturers to monopolize on the distribution of wellness products like Frontline Plus and HeartGard to nonveterinary retailers, such as Walmart and PetSmart.

The plaintiff Med Vets, Inc., is a licensed wholesale distributor of veterinary pharmaceuticals, including Frontline Plus. Its sister company and second plaintiff named in the lawsuit is Bay Medical Solutions Inc., a wholesale distributor of restricted over-the-counter pet medications that was excluded from the business by PetIQ.

The action seeks to permanently enjoin the alleged unlawful acquisition as a violation of Section 7 of the Clayton Act, which bars anticompetitive practices and seeks damages for price discrimination and attempted monopolization.

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