Commission Issues Letter in Response to SCIs Motion for Extension of Divestiture Time Period

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Issuance of letter regarding motion divestiture time period extension –– The Commission has approved issuance of a letter responding to a motion by Service Corporation International (SCI) in which SCI sought to extend the time allowed to divest several assets obtained through its 2006 acquisition of Alderwoods. On July 3, 2007, SCI filed its final petition for approval to divest the last of the up to 48 funeral homes and 15 cemeteries it was required to sell under the FTC order in this matter by May 29, 2007. SCI had filed the motion for extension of time to complete the required divestitures on May 29, 2007, when it was clear it would not meet the divestiture deadline.

The Commission has now voted to approve a letter to SCI stating that while SCI “has not met its burden under our Rules and applicable legal standards to support the grant of its Motion,” the FTC has determined it will take no action on the motion, instead of denying or approving it. The letter also states that, with several reservations, the FTC will not seek relief for SCI’s late divestitures.

The agency points out in the letter that, “The discussion herein may nonetheless serve to clarify and underscore the Commission’s standards and expectations regarding timely compliance with divestiture requirements, and what is required to make a showing of good cause to justify extending a divestiture deadline under the Commission’s Rules.” Accordingly, the letter presents the details of SCI’s divestitures as required by the FTC’s order, states that SCI has the “burden of demonstrating good cause, and that “granting an extension of time rests in the discretion of the Commission.”

It continues by stating that, while SCI contends in its motion that it had worked diligently and aggressively to accomplish the required divestitures, and claims it had not met the divestiture deadline because of the large number of properties the order required it to divest, “The Commission has never found the number of required divestitures alone to constitute sufficient good cause for extending the time to divest.”

While SCI contends that it failed to divest certain assets on time as a result of conduct by third parties that was beyond its control, “these circumstances are neither extraordinary nor unforseen as to create sufficient ‘good cause’” under the Commission’s Rule for extending the time to divest. The Commission also states that SCI has a history of selling assets similar to those required divested in the order in a timely manner, and had indicated that it “was sufficiently familiar with the Commission’s divestiture process to have anticipated and planned for the kinds of situations and delays that arose in this case . . .”

The letter concludes that while SCI “has not demonstrated that its divestiture efforts prior to the divestiture deadline were sufficient to justify the relief requested,” the Commission has determined it will take no action on the petition at this time, “but reserves the right to take such action as further inquiry or future conditions may indicate is warranted.”

A copy of the letter can be found on the FTC’s Web site and as a link to this press release. The vote approving issuance of the letter was 4-0. (FTC File No. 061-0156; Docket No. C-4174; the staff contact is Elizabeth A. Piotrowski, Bureau of Competition, 202-326-2623; see press release dated November 22, 2006.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

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