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OFT accepts undertakings from Cooperative Group (CWS) Limited

168/06    29 November 2006

The OFT has decided today to accept undertakings offered by the Cooperative Group (CWS) Limited (CGL) which it considers resolve the competition concerns which arose from the completed acquisition by CGL of Fairways Group UK Limited (Fairways). As a result, this transaction will not be referred to the Competition Commission.

The transaction raised competition concerns in relation to the supply of funeral directing services in five local areas in the UK, namely Southampton, New Forest, Eastleigh, Woking and Wychavon. In lieu of reference to the Competition Commission, CGL offered to divest a number of funeral businesses in these five local areas. The OFT considers that these proposed undertakings will clearly resolve the competition concerns identified in its decision of 19 July 2006.

Vincent Smith, OFT Senior Director for Competition 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 was concerned that the loss of Fairways would have reduced competition for funeral directing services in these five local areas. However, we are content that the divestments offered by CGL will, when implemented, resolve the competition concerns raised by the merger.

NOTES

1. The Reference Test - the OFT has a duty to make a reference to the CC 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, 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. 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 the OFT shall give notice of the proposed undertakings under Schedule 10 of the Enterprise Act 2002, and consider any representations made in accordance with that notice.

5. The text of this decision will be published in the mergers section as soon as is reasonably practicable.

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