FTC Order Preserves Competition Lost Through SCI's Acquisition of Palm Mortuary

Service Corporation International (SCI), the nation’s largest cemetery operator and the third-largest provider of cemetery services in Las Vegas, Nevada, must sell a cemetery and funeral home in Las Vegas to complete its proposed acquisition of local rival Palm Mortuary, Inc. (Palm), the Federal Trade Commission announced today. The consent order detailing the requirements resolves the Commission’s concerns regarding the proposed transaction’s potential anticompetitive effects.

Las Vegas has a highly concentrated market for cemetery services, which includes burial plots, opening and closing of graves, memorials, burial vaults, mausoleum spaces, and cemetery maintenance. According to the FTC’s complaint, SCI’s proposed acquisition of Palm would have reduced the number of significant competitors from three to two, and SCI would have controlled 76 percent of the market for funeral services.

The complaint alleges that the transaction would have increased the likelihood that the combined firm could raise prices either unilaterally or through coordinated interaction with its only remaining competitor. Entry of a new competitor in the area is not likely to counteract the alleged anticompetitive effects of the acquisition, due in part to the limited amount of land in Las Vegas that is suitable for cemeteries.

The FTC’s consent order is designed to remedy the anticompetitive effects of the proposed acquisition by requiring SCI to divest Davis Memorial Park, currently its only cemetery in the Las Vegas area, as well as the funeral home on the same property. SCI also will be required to divest the rights to the Davis trade name and the pre-need service contracts associated with the Davis facility as well as another funeral home it owns in the Las Vegas area.

The divestiture must be made to an FTC-approved buyer, and completed within 90 days after SCI acquires Palm. If the FTC finds that the purchaser or manner of the proposed divestiture is unacceptable, SCI must immediately rescind the offer and divest the assets to another FTC-approved buyer within six months from when the order becomes final.

The consent order requires SCI to maintain the divestiture assets as economically viable, marketable, and competitive until they can be divested to the Commission-approved buyer. It allows the FTC to appoint a trustee to divest any assets that SCI does not sell in a timely manner and to seek civil penalties from SCI if it fails to comply with the consent agreement. Finally, for ten years, the proposed order requires SCI to give prior notice to the Commission before acquiring any interest or assets related to the provision of cemetery services in the Las Vegas area.

The FTC would like to thank the Office of the Nevada Attorney General for its assistance in investigating this matter.

The Commission vote approving the proposed consent order was 4-0. The order will be subject to public comment for 30 days, until December 28, 2009, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://public.commentworks.com/ftc/sci-palm.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $16,000.

Copies of the complaint, consent order, and an analysis to aid in public comment can be found on 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, DC 20580. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 091-0138)