FTC deepens antitrust review of Cencora-Covetrus merger

The Federal Trade Commission sent information demands last month to customers and rivals of Covetrus Inc. and MWI Animal Health, signaling a deeper antitrust review of the $3.5 billion deal that would combine two major veterinary suppliers. The FTC had not reached a final determination on Aug. 4, but had moved beyond a routine filing into a more detailed competitive inquiry.

The proposed transaction was announced on Feb. 18, when Cencora Inc. said it would sell its subsidiary MWI Animal Health to privately held Covetrus. Cencora, formerly known as AmerisourceBergen, said the sale would sharpen its focus on drug distribution. Covetrus said the combination of companion animal distribution, production animal distribution and technology platforms would make animal healthcare more accessible and affordable.

The FTC’s requests suggest regulators are examining whether the merger could give the combined company too much leverage in a market that already runs through a relatively small number of wholesalers and manufacturers. The companies sit in a supply chain that reaches veterinary clinics, pharmacies, distributors, pet owners and livestock producers, so control over distribution can affect pricing, product availability and the number of channels veterinarians can use to fill orders. For small animal hospitals, emergency clinics and rural practices, a shift in wholesale power can quickly turn into higher costs or tighter access to medicines, diagnostics and supplies.

The American Veterinary Medical Association said on March 18 that Covetrus and MWI Animal Health were seeking regulatory approval for a merger that could potentially reshape how manufacturers, distributors and veterinary practices buy and receive products. The American Animal Hospital Association called it on March 4 a merger.

If the FTC decides the deal threatens competition, Cencora and Covetrus could face demands for concessions, structural changes or an abandoned transaction.