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An initial market study launched six months ago revealed
above-inflation price rises for more than a decade, the
Competition and Markets Authority (CMA) said on Thursday,
hitting the shares of funeral services company Dignity <DTY.L>.
The CMA also said it found that larger chains in particular have
consistently raised prices year on year and that efforts by some
to introduce cheaper funerals do not go far enough.
The funeral services market is dominated by Dignity and Co-op
Funeralcare, part of mutually-owned Co-Operative Group <42TE.L>.
Dignity, the shares of which slumped 18 percent to 827 pence,
said it was considering the recommendations in detail, adding
that it has engaged with the CMA since the study was announced
in June.
Co-op Funeralcare said it had worked closely with the CMA
throughout the watchdog's market study, adding that there was
"still more to do" and reiterating its commitment to providing
more affordable funerals.
The CMA said in its interim report that Dignity's profit margins
have been well above those of similar businesses operating in
some other countries.
Britons generally spend between 3,000 pounds and 5,000 pounds
($3,831-$6,385) organizing a funeral, with the price of
essential elements having increased by more than two thirds in
the past 10 years, the CMA said.
The scale of these price rises -- at almost three times the rate
of inflation -- does not appear to be justified by cost
increases or quality improvements, the regulator added.
"People mourning the loss of a loved one are extremely
vulnerable and at risk of being exploited. We need to make sure
that they are protected at such an emotional time and we're very
concerned about the substantial increases in funeral prices over
the past decade," said CMA Chief Executive Andrea Coscelli.
The regulator also said it was difficult to compare options as
prices are often not available online. Dignity said in a
statement that it was committed to making funeral prices for all
its branches available online by April next year.
CMA said it would be consulting on a proposed market
investigation and welcomed views on the issues identified in its
report by Jan 4.
"The best-case scenario is that the CMA just ends up asking for
greater visibility on pricing. However, the tone of the
statement suggests greater remedies will be required," said Peel
Hunt analyst Charles Hall.
A CMA spokesman said it is too early to say what specific
remedies the watchdog might pursue.
(Reporting by Arathy S Nair in Bengaluru; Editing by David
Goodman)
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