Antitrust Lawyer Blog
On November 22, the nation’s two largest funeral home and cemetery chains reached an agreement with the Federal Trade Commission, which contended that Service Corporation International’s (SCI) proposed acquisition of Alderwoods Group Inc. would lessen competition in 47 markets for funeral or cemetery services, leaving consumers with fewer choices and the prospect of higher prices or reduced levels of service. Under the settlement, SCI must sell funeral homes in 29 markets and cemeteries in 12 markets across the United States. In six other markets, SCI must sell certain funeral homes that it plans to acquire or end its licensing agreements with third-party funeral homes affiliated with SCI.
According to the complaint, the proposed acquisition would raise competitive concerns in 35 highly concentrated funeral service markets and 12 highly concentrated cemetery service markets. In six of these funeral service markets in which Alderwoods operates, SCI does not own or operate a facility, but has a competitive presence through licensing contracts with third- party funeral service providers. These Dignity Memorial affiliates are authorized by SCI to sell services and products under SCI’s Dignity Memorial service mark. SCI sells them promotional materials or sales aids and cooperates with them on pricing for funeral services.
The 29 funeral service markets are Abilene, Texas; Alhambra, California; Baton Rouge, Louisiana; Brownsville, Texas; Broward County, Florida; Cartersville, Georgia; Charlotte, North Carolina; Fort Myers, Florida; Gonzales, Louisiana; Greensboro, North Carolina; Hanford, California; Killeen, Texas; Lansing, Michigan; Lexington/West Columbia, South Carolina; Lynchburg, Virginia; Manassas, Virginia; Memphis, Tennessee; Merced, California; Meridian, Mississippi; Miami-Dade County, Florida; Newton, Mississippi; Odessa, Texas; Port Orange, Florida; Northern Rockland County, New York; Seguin, Texas; Tulare, California; Southern Ventura, California; Yakima, Washington, and Yuma, Arizona.
The 12 cemetery markets are Abilene, Texas; Baton Rouge, Louisiana; Bradenton/Palmetto, Florida; Broward County, Florida; Columbia/Lexington, South Carolina; Conroe, Texas; Fort Myers, Florida; Macon, Georgia; Memphis, Tennessee; Miami-Dade County, Florida; Nashville, Tennessee; and Ventura County, California.
The six Dignity Memorial affiliate funeral service markets are Anchorage, Alaska; Hobbs, New Mexico; Klamath Falls, Oregon; Mansfield, Ohio; Pascagoula, Mississippi; and Williamsburg, Virginia.
In April, SCI and Alderwoods entered into an agreement by which SCI would acquire all of the outstanding voting securities of Alderwoods for about $1.23 billion, including the assumption of debt. Together these firms operate in about 140 of the same local geographic areas. The complaint alleges that the proposed acquisition would violate Section 7 of the Clayton Act, as amended, and Section 5 of the Federal Trade Commission Act, as amended, by lessening competition in 47 of the markets in which the companies compete. This lessening of competition would increase the likelihood of higher prices, lower quality, or the provision of fewer services.
The settlement agreement requires SCI to sell 40 funeral homes and 15 cemeteries in 41 markets to acquirers approved by the Commission. The agreement also requires that, in the six markets in which nine third-party funeral homes operate under Dignity Memorial agreements with SCI, until SCI has terminated the agreements or sold the eight Alderwoods funeral homes, SCI may not enter into or enforce any agreement or exchange information with its affiliates regarding actual, suggested, or future prices of funeral services.
The Commission vote to approve the consent order was 5-0.
Authored by
Andre Barlow
202-589-1838
abarlow@dbmlawgroup.com