FTC Staff: Maryland Bill Would Increase Competition in the Market for Funeral Home Services

The staffs of the FTC’s Office of Policy Planning and Bureaus of Competition, Consumer Protection, and Economics have provided comments on Maryland House Bill 795, which would permit corporate ownership of funeral homes. According to the staff comments, the bill would permit easier entry into the funeral home business, thereby increasing competition and potentially offering consumers lower prices and better quality for funeral home services.

Todd Zywicki, Director of the FTC’s Office of Policy Planning, praised the bill. “Current Maryland law erects artificial, unnecessary barriers to new competition in the market for funeral home services. This bill removes one of those barriers,” he said.

The comments, available on the FTC’s Web site, were sent to Delegate Joanne Benson in response to her request. According to the comments, current Maryland law generally restricts the ownership and operation of funeral homes to licensed funeral directors. Corporations are barred from owning and operating funeral homes, except for 59 corporations holding licenses that were issued before 1945. The Bill would remove that restriction, thereby permitting both corporations and limited liability companies to own and operate funeral homes. The staff comments applaud the change. “We believe that by permitting corporations and LLCs to own funeral homes, Maryland will make entry into the funeral home industry easier, which should ultimately benefit consumers both in price and quality,” the comments noted.

The staff comments also discuss the bill’s impact on consumer protection. The comments note that “Maryland is unique among states in banning corporate ownership; yet we are not aware that any other states have experienced problems with funeral homes resulting from allowing market participants to determine the form of business organization best suited to their circumstances.” The comments conclude that “[w]e do not expect the bill to undermine Maryland’s efforts to ensure that consumers are served by capable and professionally run funeral homes.”

Finally, the comments note that the bill would not alter the requirement that each funeral establishment be owned or operated by a licensed mortician. On this point, the comments note that “substantial research demonstrates that, on balance, even this type of licensing requirement may impose costs that outweigh the benefits.”

The Commission vote authorizing staff to file the comments was 5-0. The comments represent the views of the staff and not necessarily those of the Commission or any individual Commissioner.

Copies of the staffs’ comments are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Call toll-free: 1-877-FTC-HELP.

(FTC Matter No. V-040011)