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OFT considers undertakings instead of reference to the Competition Commission of funeral services acquisition

117/06    19 July 2006

The OFT has decided today not to refer the completed acquisition by the Co-operative Group (CWS) Limited ('CGL') of Fairways Group UK Limited ('Fairways') to the Competition Commission on the condition that CGL provides satisfactory divestment undertakings to address the competition concerns.

The OFT has identified five local areas where the merger may substantially lessen competition in the provision of funeral directing services. The parties have offered to divest a number of funeral businesses within these areas to address the concerns raised by the OFT.

Vincent Smith, OFT Director of Competition Enforcement said:

'Funeral services are typically a 'distress purchase', so it is especially important that mergers do not deprive consumers of the benefits of competition - much of which is based on reputation for service quality. The OFT will now proceed to consider further whether the proposed divestments are sufficient to restore competition in these local areas so as to ensure that consumers continue to get a fair deal.'

NOTES

1. 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 a relevant merger situation has been created; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. 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.

3. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, accept from the parties concerned undertakings as it considers appropriate for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned or any adverse effect which has or may result from it. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.

4. Before accepting any such undertakings under Schedule 10 of the Enterprise Act 2002, the OFT shall give notice of the proposed undertakings and will consider any representations made in accordance with that notice.

5. The text of these decisions can be seen in the mergers section and will also appear in the Office's Weekly Gazette as soon as is reasonably practicable.

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