How can funeral directors help shape CMA probe?
Trudy Feaster-Gee and Richard Butterworth from Walker Morris LLP give their view
The Competition and Markets Authority (CMA) is due to begin its market investigation into the UK funeral sector in early 2019. The investigation represents an opportunity for funeral directors to engage with the CMA and seek to influence the shape of competition and scope of any potential future regulation. It also provides an opportunity to raise concerns which some (often smaller) firms may have regarding their ability to compete and grow in the market.
In its interim report, the CMA announced a number of serious concerns which it believes merit further investigation. In particular, the CMA indicated that price rises for funeral director and crematoria services have been above inflation for well over a decade, which it believes do not currently appear to be justified by cost increases or quality improvements.
The market investigation involves a detailed analysis by the CMA which will include direct engagement with major funeral directors and others. We expect that the CMA will begin sending information requests to funeral directors in early 2019.
As well as “off the shelf” information (such as financial accounts and marketing brochures), major suppliers are typically asked to provide transaction data and to answer detailed questions on their strategy, pricing structure, profitability, and engagement with customers. These extensive information gathering powers are backed by the ability to issue fines for failure to comply.
The CMA will also publish an "issues statement" outlining the proposed focus of its investigation and setting out potential “theories of harm”. There will also be several opportunities for funeral directors to respond in detail to CMA working papers and provisional findings as the investigation progresses. It is important for the industry to engage, as these stages offer the opportunity to influence the emerging thinking of the CMA’s decision-making panel.
The outcomes of the investigation can be potentially very significant. Under statutory rules the CMA must normally complete its market study within 18 months. Following this, the CMA has wide-ranging powers to make changes in the sector including:
- Making recommendations to Government on legislative reforms
- Requiring companies to provide more information to customers (perhaps online)
- Taking measures to promote online comparisons of funeral prices (such as via an industry sponsored website);
- Prohibiting certain fee structures or levels and/or
- Taking consumer or competition enforcement action in relation to any suspected infringements of consumer or competition law.
Funeral directors will no doubt wish to be on the front foot armed with appropriate legal and economic analysis to support their views on the market.
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