Share price soars at funeral provider after CMA aborts investigation
The share price in Dignity, the Sutton Coldfield funeral provider, soared yesterday (August 13) on the back of an aborted investigation by the Competition and Markets Authority (CMA) into prices charged by the sector.
At close of trading on Thursday, Dignity’s shares were changing hands for 634p – up by over 60%.
The CMA’s investigation, examining how customers are treated at a time when they are vulnerable to anti-competitive practice, has reported that, due to the tragic number of deaths from coronavirus since March, there has been an unprecedented increase in demand for funerals. This has made it difficult for the investigation to obtain necessary data from funeral directors, crematoria operators and local authorities, says the CMA – adding that this has “significant ramifications for the design and implementation of price controls as a possible remedy”.
This combination of circumstances highlights a serious dilemma, said the CMA , adding that on the one hand, it is clear that the funerals sector is not working well and that reforms will be needed. On the other hand, it said, the pandemic has created insurmountable obstacles to some of the solutions needed to design and implement far-reaching reform of the sector at this stage.
The CMA says it has no legal power to suspend or further extend the market investigation. Some of the remedies the CMA was considering, such as price controls, could not safely be introduced during a national emergency. The report setting out the CMA’s provisional conclusions on the market investigation provisionally recommends that when conditions are more stable, it should consider whether a supplementary market investigation is needed.
Clive Whiley, executive chairman of Dignity, said: “Dignity has engaged openly and collaboratively with the Competition and Markets Authority throughout the funerals market investigation. We will take the time to fully assess the CMA’s Provisional Decision Report and its recommendations and will continue to constructively engage directly with the CMA through the statutory process.”