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FTC Orders SCI to Sell a Funeral Home, Cemetery in Las Vegas to Complete Palm Mortuary Acquisition

      
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 The Federal Trade Commission has mandated Service Corporation International to sell a cemetery and a funeral home in the Las Vegas area to complete its proposed acquisition of Palm Mortuary Inc.

The state of Nevada filed a lawsuit Nov. 24 in federal court in Las Vegas over the planned acquisition of Palm Mortuary. The suit alleged that the proposed transaction would have violated the federal Clayton Act covering antitrust law and the Nevada Unfair Trade Practice Act.

According to the FTC, which announced the settlement Nov. 25, the consent order resolves the commission’s concerns regarding the proposed transaction’s potential anticompetitive effects. Palm Mortuary has seven locations in the Las Vegas area.

SCI is the nation’s largest funeral home and cemetery operator, as well as the third-largest provider of cemetery services in Las Vegas.

According to the FTC, 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 cemetery services market for funeral services.

“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,” the FTC stated in a press release. “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 consent order is attempting 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 preneed 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.

“Cemeteries involve major purchases, typically at an extremely difficult time when consumers are most vulnerable,” said Nevada Attorney General Catherine Cortez Masto. “It is critical to preserve competition in the cemetery market for local Las Vegas families.”

We worked with the attorney general’s office to craft that settlement agreement,” said Lisa Marshall, managing director of corporate communications for SCI. “We thank the attorney general for her diligence and look forward to serving the families of Las Vegas.”

Other FTC mandated requirements include:

• SCI must maintain the divestiture assets as economically viable, marketable, and competitive until they can be divested to the Commission-approved buyer.

•FTC may 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.

• For 10 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.