The Competition and Markets Authority (CMA) has launched a market study into funeral services.
A market study allows the CMA to investigate whether a given market is working well for consumers and to identify any further action that may be appropriate to address any issues that it uncovers.
In the context of funeral services, the CMA has noted various concerns that have been expressed regarding how the market is currently operating.
In particular, the CMA is aware of concerns that funeral prices are too high, that prices have been increasing at above inflation rates, that there are significant price differentials between providers, that there is a lack of transparency of pricing information and that customers may find it difficult to compare funeral packages, because the items included or excluded differ widely.
The CMA will now conduct an initial one-year review, focusing on two core issues: how competition between funeral directors works and transparency issues in the provision of funerals; and how competition works in the crematoria segment of the industry.
It is, of course, too early to judge the likely outcome of the CMA's market study. The possibilities range from doing nothing (eg if it concludes that the market is working effectively and gives it a clean bill of health) to launching a more in-depth 18-month review called a market investigation. If the CMA does launch a market investigation, then that would open the door to it exercising its extensive statutory powers to remedy any concerns that it identifies. Previous market investigations in other sectors have resulted in a wide range of remedies, ranging from measures to enhance transparency for customers, through to breaking up large operators.
As a first step, the CMA has issued a Statement of Scope, on which it has invited comments from interested parties.
Over the next few weeks and months, the CMA will gather further evidence in relation to the issues it is investigating. It will do this by:
- issuing information requests to industry participants, including funeral directors, trade associations, crematorium providers (local authority and private providers), intermediaries (for example, comparison websites) and other industry participants and commentators;
- conducting its own research, including with people who have purchased a funeral;
- analysing existing data sets and research;
- meeting key interested parties.
As ever with investigations of this sort, the CMA's market study will present a range of opportunities and threats for businesses in the funeral care sector.
Businesses in the funeral care sector (and, indeed, any other businesses that may have an interest in the outcome of the CMA's review) should consider the potential implications of the CMA's review. In particular, they should consider:
- What strategic opportunities (or threats) could the CMA's review present? Giving thought to this now will help inform businesses' decision as to whether (and to what extent) they wish to engage with the CMA, as well as what their commercial objectives from such engagement should be.
- How can those strategic opportunities best be realised (and how can any threats be minimised)? The CMA relies on evidence and views that are presented to it by third parties so it will willingly listen to views on how competitiveness of the market could be improved. In a similar investigation we acted on recently, our client was able to influence the scope of the investigation at an early stage by putting onto the CMA's agenda an issue that wasn't there at the outset. In that case, the CMA ultimately introduced new rules to prohibit the conduct that our client found objectionable.
- Is the business prepared for (possibly mandatory) engagement with the CMA? In any investigation of this sort, the CMA will seek evidence from a wide range of businesses. Businesses can be legally required to cooperate, so it is important that businesses are prepared for the possibility of contact from the CMA and know how they would handle the matter internally if it happens.