Split Big 2 in the Funeral Service Industry, Each Prolonging Membership in the Funeral Service Association

Fair Trade Commission, "Approval Difficult Without Integration"
Consensus on Establishing Integrated Association, but Business Models and Sales Methods Differ, Remaining on Parallel Lines

[Asia Economy Reporter Kim Heeyoon] The establishment of a unified association to discuss the issues of the domestic funeral service industry, which has 6.01 million members and advance payments totaling 5 trillion won, is facing difficulties. The Korea Funeral Service Industry Association (KFSIA), led by Boram Funeral Service, and the Korea Funeral Service Industry Association (KFSIA), chaired by Freed Life, have struggled to narrow their differences on unification since their launch last year.

According to the industry on the 18th, discussions on the unification of the two associations have been ongoing since a meeting in May, but full-scale talks have been delayed due to a power struggle. The KFSIA and the Korea Funeral Service Industry Association declared their establishment in December last year and January this year, respectively, but neither has received business group approval from the Fair Trade Commission (FTC). Although the need for a unified association to discuss industry issues such as the revision of the Installment Transactions Act, the expulsion of insolvent companies, and the impact of the COVID-19 pandemic is more urgent than ever, discussions on unification remain stagnant.

The Fair Trade Commission, which initially maintained the position that "approval is difficult without unification," has taken the lead in direct discussions on association unification but has yet to achieve significant results. The FTC believes that a unified association would be beneficial from the perspective of consumer protection.

Hong Jungseok, head of the FTC's Installment Transactions Division, explained, "Business groups aim to represent industry interests, but consumer protection functions are also important. The two groups have shown sharp conflicts due to differences in business models and sales methods. If either side acts solely for its own benefit, it is difficult to say they represent the entire industry's interests. From the perspective of enhancing consumer protection effectiveness, separate activities would only increase confusion, which is why approval has been delayed."

The FTC is also considering approving only one of the two associations if unification proves difficult. An FTC official said, "If one association actively improves systems and consumer protection this year and gains representativeness, it may be approved. The FTC's policy is that if unification is difficult, it is realistic to approve the association that meets the representativeness criteria and support its practical activities."

The differences in the two associations' positions on unification can be inferred from their currently opposing corporate management strategies. Boram Funeral Service Group chose independent operation instead of corporate integration after acquiring Hanggun Funeral Service. In contrast, VIG Partners, a private equity fund that acquired Freed Life, is promoting integrated operations with its existing acquisition, Joeun Life. While unification talks face difficulties, the two biggest companies have each surpassed 1 trillion won in advance payments through M&A.

In reality, the agreement between the two major industry players, Boram Funeral Service and Freed Life, is a prerequisite for promoting a unified funeral service association, but their differing interests make negotiations difficult. In 2016, the FTC raised the registration capital requirement for funeral service companies from 300 million won to over 1.5 billion won, leading to capital increases and restructuring that eliminated many small-cap funeral service companies. As a result, the number of funeral service companies, which once exceeded 300, has decreased to only 80 as of July this year.

This content was produced with the assistance of AI translation services.