Funeral director Service Corporation International Australia Pty Limited has given a court-enforceable undertaking to the Australian Competition and Consumer Commission over to SCIA’s acquisition of Cremations Newcastle (Australia) Holdings in Newcastle.
CNH is a holding company which controls the operations of David Lloyd Funerals and Evans Funerals Services in Newcastle, plus the Beresfield Crematorium and Macquarie Memorial Park (cemetery and crematorium) in Newcastle. The Beresfield Crematorium and Macquarie Memorial Park crematorium are the only crematoria in Newcastle and the surrounding areas.
SCIA owns a significant number of funeral businesses in Newcastle. Although the acquisition increases SCIA’s share of funeral sales in Newcastle, the ACCC’s market inquiries revealed that there remains a significant degree of competition from other funeral directors in Newcastle and the surrounding areas.
The ACCC’s competition concerns related to SCIA acquiring control of the only crematoria in Newcastle and the surrounding areas. After market inquiries, the ACCC concluded that, in its view the proposed acquisition was likely to contravene section 50* of the Trade Practices Act 1974.
The ACCC’s view reflected concerns that SCIA may take advantage of its monopoly position in the provision of cremation services to disadvantage its competitors in the Newcastle funerals market.
In order to address the ACCC’s concerns, SCIA has given the ACCC an undertaking under section 87B of the Trade Practices Act 1974, that SCIA will operate the Beresfield Crematorium and Memorial Park Crematorium separately to SCIA’s funeral businesses by ensuring:
that no advantage be given to SCIA funeral businesses, in terms of prices for cremations, including any discounts or rebates, or in terms of access to the crematoria;
that no details of the next of kin of deceased persons, which may be provided to the crematoria by non-SCIA funeral directors, be used in any way by SCIA, including SCIA crematoria or SCIA funeral businesses, for the purpose of selling pre-paid funerals; and
that there are separate management and staff of SCIA’s crematoria and funeral businesses at Newcastle.
SCIA will also notify the Newcastle community of the acquisition by an advertisement in the Newcastle Herald, and, in all future advertising of the funeral businesses being acquired, disclose SCIA’s ownership of those businesses.
SCIA’s compliance with the Undertaking will be audited regularly by an independent accounting firm.
"The Court-enforceable Undertaking which will apply for 3 years or until a competing crematoria is established, means SCIA will operate the Newcastle crematorium separately from its funeral businesses, and without disadvantaging non-SCIA funeral directors", ACCC Chairman, Professor Allan Fels, said today.
"The ACCC will continue to monitor the funeral industry for evidence of any misleading or unconscionable conduct. The ACCC will also continue to look closely at acquisitions in the funeral, burial or cremation markets, particularly acquisitions involving vertically integrated market participants".
* Section 50 of the Trade Practices Act 1974 prohibits acquisitions which would have the effect, or be likely to have the effect, of substantially lessening competition in a substantial market.