GYERTYALÁNG KEGYELETI SZOLGÁLAT TEMETKEZÉSI KFT.
The Competition Council has found that Gyertyaláng Kegyeleti Szolgálat Temetkezési Kft (hereinafter Gyertyaláng) has abused its dominant position by setting excessively high prices for the funeral services in the cemetery of Ócsa, therefore imposed a fine of HUF 1 million.
Legal background and the market
The Act on cemeteries and funerals states that cemeteries can be owned either by municipalities or churches, and that the owner has the obligation to ensure the maintenance and the operation of the cementery. The operator of the cemetery should provide without discrimination the funeral parlour, storage and refrigerator facilities to other funeral operators.
The owners of the cemetery, four churches, concluded an agreement with Gyertyaláng concerning the operation of the funeral parlour and the cemetery itself as well. According to the agreement Gyertyaláng was entitled to cover its costs by the service fee and was obliged to build a new funeral parlour which would be transferred to the owners of the cemetery after the expiry of the agreement. Under paragraph (4) of the agreement, it is not excluded that relatives of the deceased arrange the funeral with the help of other funeral operators.
In 2001 there were only 7 occasions that a different funeral operator organized a funeral at Ócsa. Gyertyaláng invoiced altogether around HUF 90000, including HUF 40000 for the use of the funeral parlour, in the case of third party operators, while for the own funeral service required a so called complex fee of considerably lower amount not individualizing different items.
During the proceedings Gyertyaláng argued that the HUF 40000 was calculated according to the payback period of the investment which is 7 years due to the fact that the agreement will expire in 7 years although the amortisation period would justify only 16-17 years.
Gyertyaláng operates on two market which are connected. On the market of cemetery operation as a result of the agreement Gyertyaláng is the only market player, meanwhile on the market of funeral services it competes with other funeral operators. Each of the funeral operators have to turn to Gyertyaláng concerning the facilities of the cemetery if they want to be active on the latter market. By abusing its dominant position on the market of cemetery operation, Gyertyaláng could extend its dominance to the second market. The competition Council found that Gyertyaláng created without justification disadvantageous market conditions for competitors.
The Competition Council established that the HUF 40000 fee for the use of the funeral parlour is to be regarded as excessively high. The purpose of this fee would be to refund the investment accomplished by Gyertyaláng. It follows that only amortization would be accepted as justified cost. Therefore the acceptable payback period would be 16 years, based on the depreciation rate applied in Gyertyaláng`s accounting system, consequently the appropriate fee would be around HUF 17800. The Competition Council acknowledged the fact that in this way the investment will not be refunded by the time the agreement expires, however the additional costs of a disadvantageous contract cannot justify excessively high prices.
March 21, 2002. Budapest
Vérné dr. Labát Éva sk. előadó
dr. Bodócsi András sk.
dr. Tóth Tihamér sk.