Service Corporation International; Analysis of the Agreement Containing Consent Orders to Aid Public Comment, 65127-65129 [E9-29332]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 74, Number 235 (Wednesday, December 9, 2009)]
[Notices]
[Pages 65127-65129]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-29332]


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FEDERAL TRADE COMMISSION

[File No. 091 0138]


Service Corporation International; Analysis of the Agreement 
Containing Consent Orders to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint and the terms of the consent order -- embodied in the consent 
agreement -- that would settle these allegations.

DATES: Comments must be received on or before December 28, 2009.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to ``SCI Palm, 
File No. 091 0138'' to facilitate the organization of comments. Please 
note that your comment -- including your name and your state -- will be 
placed on the public record of this proceeding, including on the 
publicly accessible FTC website, at (https://www.ftc.gov/os/publiccomments.shtm).
    Because comments will be made public, they should not include any 
sensitive personal information, such as an individual's Social Security 
Number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. Comments also 
should not include any sensitive health information, such as medical 
records or other individually identifiable health information. In 
addition, comments should not include any ``[t]rade secret or any 
commercial or financial information which is obtained from any person 
and which is privileged or confidential. . . .,'' as provided in 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule 
4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing material for which 
confidential treatment is requested must be filed in paper form, must 
be clearly labeled ``Confidential,'' and must comply with FTC Rule 
4.9(c), 16 CFR 4.9(c).\1\
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    \1\The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See FTC Rule 4.9(c), 16 CFR 
4.9(c).
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    Because paper mail addressed to the FTC is subject to delay due to 
heightened security screening, please consider submitting your comments 
in electronic form. Comments filed in electronic form should be 
submitted by using the following weblink on: (https://public.commentworks.com/ftc/sci-palm) and following the instructions on 
the web-based form. To ensure that the Commission considers an 
electronic comment, you must file it on the web-based form at the 
weblink: (https://public.commentworks.com/ftc/sci-palm). If this Notice 
appears at (https://www.regulations.gov/search/index.jsp), you may also 
file an electronic comment through that website. The Commission will 
consider all comments that regulations.gov forwards to it. You may also 
visit the FTC website at (https://www.ftc.gov/) to read the Notice and 
the news release describing it.
    A comment filed in paper form should include the ``SCI Palm, File 
No. 091 0138'' reference both in the text and on the envelope, and 
should be mailed or delivered to the following address: Federal Trade 
Commission, Office of the Secretary, Room H-135 (Annex D), 600 
Pennsylvania Avenue, NW, Washington, DC 20580. The FTC is requesting 
that any comment filed in paper form be sent by courier or overnight 
service, if possible, because U.S. postal mail in the Washington area 
and at the Commission is subject to delay due to heightened security 
precautions.
    The Federal Trade Commission Act (``FTC Act'') and other laws the 
Commission administers permit the collection of public comments to 
consider and use in this proceeding as appropriate. The Commission will 
consider all timely and responsive public comments that it receives, 
whether filed in paper or electronic form. Comments received will be 
available to the public on the FTC website, to the extent practicable, 
at (https://www.ftc.gov/os/publiccomments.shtm). As a matter of 
discretion, the Commission makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC website. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy, at (https://www.ftc.gov/ftc/privacy.shtm).

FOR FURTHER INFORMATION CONTACT: Goldie V. Walker (202-326-2919), 
Bureau of Competition, 600 Pennsylvania Avenue, NW, Washington, D.C. 
20580.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 the 
Commission Rules of Practice, 16 CFR 2.34, notice is hereby given that 
the above-captioned consent agreement containing a consent order to 
cease and desist, having been filed with and accepted, subject to final 
approval, by the Commission, has been placed on the public record for a 
period of thirty (30) days. The following Analysis to Aid Public 
Comment describes the terms of the consent

[[Page 65128]]

agreement, and the allegations in the complaint. An electronic copy of 
the full text of the consent agreement package can be obtained from the 
FTC Home Page (for November 25, 2009), on the World Wide Web, at 
(https://www.ftc.gov/os/actions.shtm). A paper copy can be obtained from 
the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, 
Washington, D.C. 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order to Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Orders (``Consent 
Agreement'') from Service Corporation International (``SCI'') that will 
completely remedy the anticompetitive effects that would likely result 
from SCI's proposed acquisition of Palm Mortuary, Inc. (``Palm''). 
Under the terms of the proposed Consent Agreement, SCI is required to 
divest a cemetery, Davis Memorial Park, an associated funeral home in 
the Las Vegas, Nevada, metropolitan area, rights to the Davis trade 
name, and the pre-need service contracts relating to both the 
associated Davis Funeral Home and a second Davis Funeral Home owned by 
SCI in the Las Vegas area.
    The proposed Consent Agreement has been placed on the public record 
for thirty (30) days to solicit comments from interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) days, the Commission will again review the 
proposed Consent Agreement and will decide whether it should withdraw 
from the proposed Consent Agreement, modify it, or make it final.
    SCI, doing business as Alderwoods (Nevada) Inc., and Palm entered 
into an agreement for SCI to acquire 100 percent of Palm's outstanding 
voting securities on August 5, 2009. The Commission's Complaint alleges 
that the proposed acquisition, if consummated, would violate Section 7 
of the Clayton Act, as amended, 15 U.S.C. Sec.  18, and Section 5 of 
the FTC Act, 15 U.S.C. Sec.  45, as amended, by lessening competition 
in the provision and sale of cemetery services in the Las Vegas, 
Nevada, metropolitan area.

II. The Parties

    SCI is a public corporation organized, existing, and doing business 
under and by virtue of the laws of the State of Texas, with its office 
and principal place of business located at 1929 Allen Parkway, Houston, 
Texas 77019. SCI currently is the third largest provider of funeral 
home and cemetery services in the Las Vegas metropolitan area, where 
SCI operates two funeral homes and one funeral home and cemetery 
combination facility.
    Palm is a privately-held corporation organized, existing, and doing 
business under and by virtue of the laws of the State of Nevada, with 
its office and principal place of business located at 1325 N. Main 
Street, Las Vegas, Nevada 89101. In the Las Vegas metropolitan area, 
Palm operates five funeral home and cemetery combination facilities, 
three standalone funeral homes, and one mausoleum, making it the 
largest provider in the area of both funeral home and cemetery 
services.

III. The Complaint

    According to the Commission's proposed Complaint, the relevant 
product market in which SCI and Palm compete is the provision and sale 
of cemetery services in the Las Vegas, Nevada, metropolitan area. 
Cemetery services include the traditional products and services offered 
by perpetual care cemeteries, including burial spaces, opening and 
closing of graves, memorials and burial vaults, mausoleum spaces, 
cemetery maintenance and upkeep, and advance disposition planning.
    Concentration in the market for cemetery services in the Las Vegas 
area is very high, and the proposed acquisition would further increase 
concentration levels. Post-acquisition, the combined entity will have a 
76 percent share in the cemetery services market.\2\ Post-acquisition, 
the Herfindahl-Hirschman Index (``HHI'') for cemetery services will be 
6261, and the acquisition will increase HHI levels by 1876.
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    \2\In calculating market shares, the Commission relied on the 
number of ``calls'' (funerals or interments) of each competitor 
rather than dollar revenues.
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    According to the Commission's proposed Complaint, entry into the 
cemetery services market is unlikely to be timely, likely, or 
sufficient to prevent anticompetitive effects in the Las Vegas area. 
Entry would be difficult because of the limited availability of 
geographically-desirable land, zoning regulations and other statutory 
restrictions, and high sunk costs. An entrant would also need to build 
a customer base in the face of competition from well-established 
cemeteries that are not capacity constrained and have long-standing 
reputations and heritage traditions in the community.
    Finally, the proposed Complaint alleges that the proposed 
Acquisition will eliminate significant competition between SCI and Palm 
in the highly concentrated cemetery services market and increase the 
likelihood that SCI would be able to unilaterally raise prices or 
exercise market power through coordinated interaction among 
competitors.

IV. The Consent Agreement

    The proposed Consent Agreement would preserve competition 
completely in the relevant market alleged in the Complaint by requiring 
that SCI divest to a Commission-approved acquirer the Davis combination 
cemetery/funeral home facility, rights to the Davis trade name, and all 
the pre-need service contracts associated with the Davis combination 
facility and with a second Davis funeral home in the Las Vegas 
metropolitan area (collectively the ``Divestiture Business''). 
Divestiture of the pre-need service contracts associated with a second 
Davis funeral home in the Las Vegas area is to help ensure the 
competitiveness and viability of the Divestiture Business.
    The proposed Consent Agreement requires that the divestiture occur 
no later than ninety (90) days after SCI consummates its acquisition of 
Palm. If SCI divests the assets during the public comment period, and 
if, at the time the Commission decides to make the Order final, the 
Commission notifies SCI that either the purchaser is not an acceptable 
acquirer or that the asset purchase agreement is not an acceptable 
manner of divestiture, then SCI must immediately rescind the 
transaction in question and divest those assets within six (6) months 
of the date the Order becomes final to an acquirer and in a manner that 
receives the prior approval of the Commission.
    The Consent Agreement further requires SCI to maintain the economic 
viability, marketability, and competitiveness of the Divestiture 
Business until the potential acquirer is approved by the Commission and 
the divestiture is complete. For six (6) months following the 
divestiture, SCI is required to provide transitional services, as 
needed, to assist the acquirer of the Divestiture Business.
    The proposed Consent Agreement also allows the Commission to 
appoint an interim monitor to ensure SCI's compliance with the Order to 
Maintain

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Assets and a trustee to divest any divestiture assets that SCI fails to 
timely divest. The Commission also may seek civil penalties from SCI 
for non-compliance with the Consent Agreement.
    The proposed Consent Agreement prohibits SCI from acquiring any 
interest or assets engaged in the provision of cemetery services in the 
Las Vegas metropolitan area for ten (10) years without providing prior 
written notice to the Commission. In addition, SCI is required to file 
periodic reports of compliance with the proposed orders.
    The purpose of this analysis is to facilitate public comment on the 
proposed Consent Agreement, and it is not intended to constitute an 
official interpretation of the proposed Consent Agreement or to modify 
its terms in any way.
    By direction of the Commission.

Donald S. Clark,
Secretary.
[FR Doc. E9-29332 Filed 12-8-09; 9:02 am]
BILLING CODE: 6750-01-S