The Federal Trade Commission (FTC) is suing to block the proposed $3.5 billion acquisition of MWI Animal Health by Covetrus, arguing the combination would reduce competition in the U.S. veterinary product distribution market.
The lawsuit, filed Nov. 13 in the U.S. District Court for the Southern District of New York, was joined by attorneys general from 13 states: Arizona, Arkansas, California, Colorado, Maine, Michigan, Minnesota, Nebraska, New York, North Carolina, Ohio, Oregon and Texas.
The FTC contends that combining the two largest veterinary distributors would eliminate significant competition, potentially increasing costs and reducing purchasing options for veterinary practices. Covetrus disputes the agency’s assessment, arguing regulators have an outdated and overly narrow understanding of how veterinarians purchase products. The company has said it intends to defend the transaction.
FTC Raises Concerns About Veterinary Distribution Competition
MWI Animal Health, a subsidiary of pharmaceutical distributor Cencora, supplies veterinary practices and livestock producers with pharmaceuticals, vaccines, equipment and other products. Covetrus provides veterinary distribution, pharmacy services, technology and practice-management solutions.
In its lawsuit, the FTC identifies two relevant markets: distribution of products to veterinary clinics and distribution of products to large corporate veterinary accounts. The agency argues Covetrus and MWI are the two largest suppliers in both markets.
The FTC points to direct competition between the companies, including pricing strategies and rebates. According to the agency, Covetrus responded to aggressive pricing from MWI by lowering its own prices and offering rebates through its VetSuite program.
The agency also describes how online price-comparison platform Vetcove intensified competition by allowing veterinary practices to compare distributor prices and use competing offers in negotiations.
In the FTC press release, Daniel Guarnera, director of the FTC’s Bureau of Competition, claims, “Covetrus wants to eliminate its closest competitor rather than compete for veterinary clinic customers.”
The FTC argues that eliminating one of these major competitors would weaken price competition, potentially resulting in higher costs, reduced service quality and fewer purchasing options for veterinary practices.
Covetrus Challenges the FTC’s Market Assessment
Covetrus argues the FTC’s analysis does not adequately account for the range of purchasing options available to veterinary practices.
In its Nov. 13 response, the company points to competition from manufacturers selling directly to practices, other distributors and online veterinary marketplaces. Covetrus says practices routinely purchase from multiple sources and can switch suppliers when better pricing or service is available.
The company reports that more than 60% of U.S. veterinary practices use online veterinary marketplaces, which provide access to more than 40 distributors and thousands of manufacturers. These figures are Covetrus’ own estimates.
Covetrus maintains that combining the businesses would improve distribution efficiencies and reduce the cost of serving veterinary practices.
The disagreement centers on whether these alternative purchasing channels provide sufficient competition to offset the loss of a major distributor.
Production Animal Distribution Also Under Scrutiny
The FTC acknowledges that specialty distributors, manufacturers, retailers and other suppliers offer production animal health products and services. However, the agency argues these alternatives do not provide meaningful competitive constraints on veterinary clinic distributors.
This distinction is particularly relevant to food animal veterinarians, who rely on distribution networks for vaccines, pharmaceuticals, reproductive products and other supplies used in cattle health programs.
The proposed merger would combine the companies’ production animal distribution operations alongside their companion animal businesses and technology platforms. However, publicly available information does not establish the extent of their direct overlap in livestock product distribution or provide a reliable production animal-specific market-share estimate.
A Proposed Merger Under Months of Regulatory Scrutiny
Cencora and Covetrus announced the $3.5 billion transaction in February 2026. Under the proposed arrangement, Cencora would receive $1.25 billion in cash, $800 million in preferred equity and retain a 34.3% common equity stake in the combined business.
The deal underwent several months of regulatory review:
- May 20, 2026: Cencora receives an FTC request for additional information and documents concerning the merger.
- Summer 2026: Regulators seek information from customers and competitors about veterinary distribution and market competition.
- October 6, 2026: Covetrus and MWI reportedly submit a proposed remedy package to regulators in an effort to address competition concerns.
- November 13, 2026: The FTC and 13 state attorneys general file suit to block the transaction.
Regulators reportedly were not satisfied with the companies’ proposed remedies, prompting the legal challenge.
What’s next for the proposed acquisition?
The lawsuit puts the future of the transaction in the hands of the federal court. Covetrus has said it will defend the deal, while the FTC seeks to prevent the companies from completing the proposed combination.
If regulators succeed in blocking the acquisition, MWI would remain under Cencora’s ownership unless the parties pursue another arrangement. If the companies prevail, the proposed combination could move forward, subject to remaining transaction requirements.
The outcome could shape competition among veterinary distributors and influence how regulators evaluate consolidation in both companion and production animal health markets.
