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The funeral sector has been under the microscope of competition authorities since the start of the pandemic. At the end of March 2020, the Spanish Markets and Competition Commission (CNMC) set up an inbox for consumers to send information, queries or complaints related to COVID-19. Just a few weeks later, as a result of the complaints received, the CNMC announced that it was opening investigations in several markets, including the funeral services and life insurance markets.
Although those investigations have not yet led to any sanction proceedings, significant judgments and decisions for the sector have been published in recent months. The CNMC has also carried out inspections in these markets to investigate possible conduct contrary to the Law for the Defense of Competition. We compile these developments below.
CNMC investigation into the life insurance and funeral services markets due to possible unauthorized merger transactions
Between September 8 and 10, the CNMC conducted inspections at the headquarters of several companies in the funeral and insurance sector, thus resuming the inspection activity that had been halted since the declaration of the state of emergency.
The inspections have taken place in the framework of an investigation into possible early execution of one or several merger transactions that, although notified, have not yet been authorized by the authority. The investigation also relates to possible prior coordination between the participants in one of the mergers and supplying the authority with misleading, harmful or incomplete information. Interestingly, this is the first time the CNMC has opened an inspection to analyze a notified merger.
The High Court of Justice of Castile and León cancels the 60,170 euro fine against Serfunle for abuse of a dominant position
In September 2017, the Competiton Authority of Castile and León fined the Funeral Services Association of León and its Alfoz (Mancomunidad de Servicios Funerarios de León y su Alfoz, Serfunle) 60,170 euros for abusing its dominant position by imposing discriminatory prices on its customers. Specifically, the Competiton Authority of Castile and León considered that Serfunle had implemented a more beneficial discounts policy for León’s main insurance operators (“reduction of turnover”) than for individual customers.
In its judgment, the High Court of Justice of Castile and León concludes that the difference in prices is due to the different services billed to each type of customer and not discrimination in prices for the same services. According to the High Court, the Competiton Authority of Castile and León’s ruling merely showed that individual customers had been billed for specific services and those services had not been billed to the insurance companies. However, the Competiton Authority of Castile and León had not proved that the services not billed to insurance companies had been actually provided.
This investigation emanates from previous proceedings, initiated in 2012, in which Serfunle agreed to clarify its prices and discounts policy. The decision closing that investigation concluded that Serfunle could apply discounts based on the volume of services contracted.
The Competiton Authority of Castile and León closes the proceedings against several companies in the sector
In February 2015, the Competiton Authority of Castile and León sanctioned VEDOSA, S.L. and FUSANTER, S.L. for anti-competitive practice. The sanctioned conduct was an agreement by which VEDOSA, S.L. and FUSANTER, S.L., rival companies and, in turn, majority shareholders of PARQUE CEMENTERIO SALAMANCA, S.A., issued negative invoices through Parque Cementerio Salamanca, S.A. to benefit from commercial discounts when renting the vigil room. Thus, to the detriment of other competitors, they reduced the amount of the official tariffs and benefited from a reduction in the service rental costs.
Subsequently, in the ruling in proceedings TDC/SAN/12/2019, which investigated the complaint against VEDOSA, S.L. and FUSANTER, S.L. for practices similar to those already sanctioned, the Competiton Authority of Castile and León declared that the sanction proceedings had expired and, since the conduct was not statute barred, it opened new proceedings extending the scope of the investigation – TDC SAN/1/2020 –.
After analyzing the documentation requested from the companies (negative invoices issued between 2017 and 2019), the Competiton Authority of Castile and León concluded that the compensation disappeared from 2017 onwards, and that for the next two years, the only negative billing was to private individuals in cases in which the services provided had actually been amended. For this reason, the Competiton Authority of of Castile and León agreed to close the investigation.
We will continue to report on developments in the sector.
Authors: Cristina Vila, Pablo García and Pere Vicens
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