OFT considers funeral homes divestments in Co-op – Plymouth & South West merger

108/09 4 September 2009

The OFT is considering an offer by the Co-operative Group Limited (Co-op) to divest funeral homes in one local area following its anticipated acquisition of Plymouth & South West Co-operative Society Limited (PSW).

PSW is an independent co-operative society in the South West of England. Its primary focus is on food retail and the provision of funeral services.

The OFT found that the merger raised competition concerns in respect of funeral services in one local area where Co-op already had a presence.

Alastair Mordaunt, OFT Director of Mergers said:

'Although this may not be a sector where people would naturally think about the importance of competition, funerals can be a costly business and so it is important that the bereaved families have a choice of funeral supplier.'

'Our priority now is to secure a divestment package that will restore competition to pre-merger levels.'

If the divestments are not accepted, then a referral to the Competition Commission will be necessary.

NOTES

1. Co-op and PSW are separate independent corporate bodies registered under the Industrial and Provident Societies Act 1965.

2. The OFT has identified one area where there are competition concerns within the funeral services sector.

3. For reasons of confidentiality, the OFT will not currently disclose the area in which the competition concerns arise. Details on how the OFT identified the local area in which competition concerns arise will follow in the full text of the decision and in public consultation on the undertakings in lieu.

4. The reference test - the OFT has a duty to make a reference to the Competition Commission if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation, and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

5. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises, and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million, or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

6. Undertakings in lieu of reference - under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference
to the Competition Commission, and for the purpose of remedying, mitigating or preventing the substantial lessening of
competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. The OFT is required to consult publicly before accepting any such undertakings.

7. The full text of these decisions will appear in the Mergers section.

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