Completed acquisition by the Co-operative Group (CWS) Limited of Fairways Group UK Limited

Affected market: Funeral directing services

No. ME/2421/06

The OFT's decision on reference under section 22 given on 29 November 2006. Full text of decision published 5 December 2006.

PARTIES

Cooperative Group (CWS) Limited (CGL) is active in food retail, pharmacy, banking, travel agency and optical services. CGL is also active in the supply of funeral directing services through its Funeralcare business. Funeralcare is also active in the manufacture of coffins and the wholesaling of funeral accessories such as gowns, coffin liners and ornamentation. Funeralcare operates 602 funeral businesses across the UK and conducted 81,000 funerals in 2005.

Fairways Group UK Limited (Fairways) supplies funeral directing services. It has 49 funeral businesses located across southern England, principally in East Anglia, Hampshire and South West London. It conducted 5,400 funerals in 2005, generating a UK turnover of £14 million.

TRANSACTION

On 24 March 2006, CGL purchased 86 per cent of the issued share capital of Fairways, thereby acquiring sole control of Fairways (the remaining shares are held by individual directors).

JURISDICTION

As a result of this transaction CGL and Fairways have ceased to be distinct. The parties overlap in the supply of funeral directing services in the UK. The parties' combined share of supply in a number of different areas in Southern England which (the parties submit) together constitute a substantial part of the UK is 26 per cent. As a result, the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

BACKGROUND

By way of a decision of 19 July 2006 (the Decision) the OFT announced that, on the evidence available to it, the OFT believed that it may be the case that the merger may be expected to result in a substantial lessening of competition in relation to the supply of funeral services in five local areas: Southampton, New Forest, Eastleigh, Woking and Wychavon. A copy of the decision, Annexe 1, can be downloaded from the related items column.

The OFT therefore suspended its duty to refer the transaction to the Competition Commission under Section 22 of the Enterprise Act 2002 because it was considering whether to accept appropriate undertakings from CGL in lieu of reference.

CGL offered to give undertakings to divest a number of funeral homes in these five local areas to an approved purchaser or purchasers to remedy the concerns identified.

On 25 October 2006, the OFT published the proposed undertakings inviting the views of interested parties as to whether the proposed undertakings would be appropriate to remedy, mitigate or prevent the competition concern identified. The OFT did not receive any responses to this invitation to comment.

DECISION

The merger would have been referred to the Competition Commission if CGL had failed to give suitable undertakings pursuant to section 73 of the Act to address the competition concerns outlined above. The OFT has decided to accept the proposed undertakings in lieu of reference as they address those competition concerns.

This merger will therefore not be referred to the Competition Commission and the undertakings, which have been signed by CGL, which can be downloaded from the related items column, will come in effect from this date.

Back to top