Co-operatives co-operate — up to a point

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Posted by Charles

If any group of people in a local community wished to establish a funeral service inspired and informed by the principles and ideals of co-operativism, what would their position be with regard to the sixth Rochdale Principle if they found themselves in the circumstance of potentially competing with an established co-op funeral home belonging either to Co-operative Funeralcare or to an independent regional co-operative society? 

6th Principle: Co-operation Among Co-operatives

Co-operatives serve their members most effectively and strengthen the Co-operative Movement by working together through local, national, regional and international structures.

First, a little history. According to a Monopolies and Mergers Commission report dated, I think, 1986, this was the position until midway through the twentieth century:

Each [co-operative] retail society … was formed by local people to serve the interests of their locality and consequently each of them was rooted in and traded in the community from which it originally sprang. Until 1960 boundary agreements existed between individual retail societies which, in effect, restricted them to trading within their particular recognised trading areas. The Co-operative Union, formed in 1869 to establish and organise Co-operative societies, acted as an  ‘arbiter’, according to its rules, in ‘boundary’ disputes between societies. 

In terms of the sixth principle, this makes perfect sense: co-operatives co-operate, therefore they do not compete against each other. 

All this came to an end with the passage of the Restrictive Trade Practices Act 1956: 

The Restrictive Trade Practices Act 1956 was aimed at preventing traders from entering into anti-competitive arrangements against the public interest. 

At first there was no change: 

Following the passage of the Act, some 200 such ‘boundary’ agreements between Co-operative societies were registered under the Act. 

But in 1960 these boundary agreements were found to be illegal: 

In 1960 the Restrictive Practices Court adjudicated on a boundary agreement between the adjacentDoncasterand Retford Co-operative Societies and declared that the agreement had not overcome the burden of demonstrating that it was in the public interest and that the relevant restrictions on trading outside their respective areas were void. Societies were subsequently advised by the Co-operative Union to terminate any boundary agreements to which they were parties. 

This is why, in case you ever wondered, Funeralcare competes with the funeral businesses of our last remaining independent regional co-ops. 

The Co-operative Funeralcare also has a peculiar habit of advertising the funeral homes of those societies it competes with. It’s been at it for a while. Back in 1986 the Competition Commission noted: 

CWS [Co-operative Wholesale Society, now The Co-operative Group] advertises in newspapers local toClydebank(eg the Glasgow Guardian and Milngavie and Bearsden Herald). CWS also told us that a ‘combined advert’ under which Clydebank was listed as a ‘branch’ of CWS was placed by CWS, without reference to senior management, in the Glasgow Yellow Pages as a favour toClydebank, as that Society could not afford to advertise separately. 

Funeralcare persists  in this eccentric practice, listing, for example, four out of eight Scotmid funeral homes here

We asked Scotmid if they knew about this. They didn’t. We asked if they knew why Funeralcare was doing this. They didn’t. We asked why only four out of eight funeral homes were advertised. They had no idea. 

For anyone out there wanting to establish their own funeral co-op, the way is clear. Go for it. You may even get some free advertising from the mother ship.

Monopolies and Mergers Commission report here


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