UNITED STATES OF AMERICA
In the Matter of
SERVICE CORPORATION INTERNATIONAL, a corporation.
File No. 981 0353
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission") having initiated an investigation of the proposed acquisition by Service Corporation International ("SCI"), a corporation, of all of the voting securities of Equity Corporation International ("ECI"), a corporation, and it now appearing that SCI, herein sometimes referred to as "Proposed Respondent," is willing to enter into an agreement containing an order to divest certain assets, and providing for other relief,
IT IS HEREBY AGREED by and between Proposed Respondent SCI, its duly authorized officers and attorneys, and counsel for the Commission that:
1. Proposed Respondent SCI is a 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.
2. Proposed Respondent SCI admits all the jurisdictional facts set forth in the draft of complaint here attached.
3. Proposed Respondent SCI waives:
4. Within thirty (30) days of the date this Agreement is signed by Proposed Respondent, and every thirty (30) days thereafter until the order becomes final, Proposed Respondent shall submit a report, as contemplated by Rules 2.33 and 4.9(b)(7) of the Commission's Rules of Practice and Procedure, 16 C.F.R. §§ 2.33 and 4.9(b)(7), duly signed by the Proposed Respondent, setting forth in precise detail the manner in which Proposed Respondent will comply with Sections II and III of the proposed consent order, when and if entered, and the Asset Maintenance Agreement, attached and made a part hereof, as Appendix I. These reports will not become part of the public record unless and until this Agreement Containing Consent Order is accepted by the Commission for public comment.
5. This agreement shall not become part of the public record of the proceeding unless and until it is accepted by the Commission. If this agreement is accepted by the Commission, it, together with the draft of complaint contemplated thereby, will be placed on the public record for a period of sixty (60) days and information in respect thereto publicly released. The Commission thereafter may either withdraw its acceptance of this agreement and so notify SCI, in which event it will take such action as it may consider appropriate, or issue and serve its complaint (in such form as the circumstances require) and decision, in disposition of the proceeding.
6. This agreement is for settlement purposes only and does not constitute an admission by Proposed Respondent SCI that the law has been violated as alleged in the draft of complaint here attached, or that the facts as alleged in the draft complaint, other than jurisdictional facts, are true.
7. This agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of Section 2.34 of the Commission's Rules, the Commission may, without further notice to Proposed Respondent SCI, (a) issue its complaint corresponding in form and substance with the draft of complaint here attached and its decision containing the following order to divest and to cease and desist in disposition of the proceeding and (b) make information public in respect thereto. When so entered, the order to divest and to cease and desist shall have the same force and effect and may be altered, modified, or set aside in the same manner and within the same time provided by statute for other orders. The order shall become final upon service. Delivery by the U.S. Postal Service of the complaint and decision containing the agreed-to order to Proposed Respondent SCI's address as stated in this agreement shall constitute service. Proposed Respondent waives any right it may have to any other manner of service. The complaint may be used in construing the terms of the order, and no agreement, understanding, representation, or interpretation not contained in the order or the agreement may be used to vary or contradict the terms of the order.
8. By signing this agreement, Proposed Respondent represents that it can accomplish the full relief contemplated by this agreement.
9. Proposed Respondent has read the proposed complaint and order contemplated hereby. It understands that, once the order has been issued, it will be required to file one or more compliance reports showing that it has fully complied with the order. Proposed Respondent further understands that it may be liable for civil penalties in the amount provided by law for each violation of the order after it becomes final.
10. Proposed Respondent agrees to be bound by all of the terms of the Asset Maintenance Agreement, in the attached Appendix I.
11. Proposed Respondent agrees to be bound by the terms of the proposed order pending its final approval by the Commission.
12. Proposed Respondent represents that, as of December 18, 1998, it has entered into a binding asset purchase agreement with Carriage Services, Inc. and Carriage Funeral Holdings, Inc., (the "Carriage Agreement") for the sale, or in those situations where management contracts are involved, assignments, of all Assets To Be Divested, as described in Schedule A, and that a copy of this agreement, together with all attachments, has been provided to the staff of the Commission.
13. Proposed Respondent shall include and enforce a provision in the Carriage Agreement that requires the transaction to be rescinded, and the Assets To Be Divested returned to the Proposed Respondent, if the Proposed Respondent divests the Assets To Be Divested to Carriage prior to the date the Commission issues the order and the Commission determines not to issue the order or the Commission notifies the Proposed Respondent that Carriage is not an acceptable acquirer or that the Carriage Agreement is not an acceptable manner of divestiture. Should the Commission make any such determination, then, upon notification by the Commission to the Proposed Respondent, the divestiture to Carriage shall be null and void and the Proposed Respondent shall take all actions necessary to restore the parties to their respective positions in existence prior to the divestiture to Carriage.
IT IS ORDERED that, as used in this Order, the following definitions shall apply:
A. "Respondent" or "SCI" means Service Corporation International, its directors, officers, employees, agents, representatives, successors and assigns; its subsidiaries, divisions, groups and affiliates controlled by SCI, and the respective directors, officers, employees, agents, representatives, successors and assigns of each.
B. "Commission" means the Federal Trade Commission.
C. "Acquisition" means the proposed acquisition by SCI of Equity Corporation International.
D. "Funeral Service" means a group of services provided at the death of an individual, the focus of which is some form of commemorative ceremony of the life of the deceased at which ceremony the body is present; this group of services ordinarily includes, but is not limited to: removal of the body from the place of death; embalming or other preparation; making available a place for visitation and viewing, for the conduct of a Funeral Service, and for the display of caskets and outside cases; and arrangement for and conveyance of the body to a cemetery or crematory for final disposition.
E. "Cemetery Service" means a group of goods and services provided for the final disposition of human remains in a cemetery, whether by burial, entombment in a mausoleum or crypt, or disposition in a niche.
F. "Assets To Be Divested" consists of the businesses identified in Schedule
A, attached to this Order and made a part hereof, and all assets, leases, properties,
permits (to the extent transferable), customer lists, businesses and goodwill, tangible
and intangible, related to or utilized in the businesses operated at those locations.
H. "Carriage Agreement" means the December 18, 1998, asset purchase agreement between Respondent SCI and Carriage for the sale or assignment by Respondent to Carriage of all Schedule A Assets.
IT IS FURTHER ORDERED that:
A. Respondent SCI shall divest absolutely and in good faith the Assets To Be Divested to:
B. If Respondent SCI submits any application for approval of a divestiture pursuant to Paragraph II. A. 2., Respondent shall also provide a complete copy of such application to the Attorney General of each state in which any of the Assets To Be Divested are located. The purpose of this requirement is to allow the Attorney General of any state in which such proposed divestiture assets are located to provide information to the Commission to aid the Commission in its review and action upon each such application.
C. In each of the fourteen (14) geographic areas identified in Schedule A, attached, Respondent shall take such actions as are necessary to maintain the viability, marketability, and competitiveness of the Assets To Be Divested, pending the divestiture of the assets required to be divested pursuant to Paragraph II. A. of this Order in that particular geographic area, and preserve the ability of these assets to compete at the same levels of sales, profitability, and market share as prior to the Acquisition, and shall not permit the destruction, removal, wasting, deterioration, or impairment of any of the these assets, except for ordinary wear and tear that does not affect their viability, marketability, or competitiveness, and shall transfer each asset required to be divested pursuant to Section II of this Order to a Commission-approved acquirer in a manner that preserves the asset's marketability, viability, and competitiveness. Respondent SCI shall comply with all terms of the Asset Maintenance Agreement, attached to this Order and made a part hereof as Appendix I. The Asset Maintenance Agreement shall continue in effect until such time as Respondent has divested all of the Assets To Be Divested as required by this Order.
D. The purposes of this Section II are to remedy the lessening of competition resulting from the Acquisition, as alleged in the Commission's complaint, and to ensure the continuation of the Assets To Be Divested as ongoing, viable enterprises engaged in the same businesses in which they are engaged at the time of the Acquisition.
IT IS FURTHER ORDERED that:
A. If Respondent has not divested, absolutely and in good faith, the Assets To Be Divested as required by Paragraph II. A. of this Order, the Commission may appoint one or more trustees to accomplish the required divestitures, at no minimum price, to an acquirer or acquirers that receive(s) the prior approval of the Commission, and in a manner that receives the prior approval of the Commission. Each trustee shall be appointed to accomplish the divestitures for one or more of the geographic areas identified in Schedule A.
B. In the event that the Commission or the Attorney General brings an action pursuant to Section 5(l) of the Federal Trade Commission Act, 15 U.S.C. § 45(l), or any other statute enforced by the Commission, the Respondent shall consent to the appointment of a trustee in such action.
C. Neither the appointment of a trustee nor a decision not to appoint a trustee shall preclude the Commission from seeking civil penalties or any other relief (including, but not limited to, a court-appointed trustee) pursuant to the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by the Respondent to comply with this Order.
D. If a trustee is appointed by the Commission or a court pursuant to Paragraphs III. A. or III. B. of this Order, Respondent shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:
IT IS FURTHER ORDERED that:
A. For a period of ten (10) years from the date this Order becomes final, Respondent shall not, without providing advance written notification to the Commission, directly or indirectly, through subsidiaries, partnerships, or otherwise, acquire any stock, share capital, equity or other interest in any concern, corporate or non-corporate, or any assets used or previously used (and still suitable for use), engaged in at the time of such acquisition, or within the two (2) years preceding such acquisition engaged in the provision of
B. The aforesaid notification shall be given on the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations as amended (hereinafter referred to as "the Notification"), and shall be prepared and transmitted in accordance with the requirements of that part, except that no filing fee will be required for any such notification, notification shall be filed with the Secretary of the Commission, notification need not be made to the United States Department of Justice, and notification is required only of Respondent and not of any other party to the transaction. Respondent shall provide the Notification to the Commission at least thirty (30) days prior to consummating the transaction (hereinafter referred to as the "first waiting period"). If, within the first waiting period, representatives of the Commission make a written request for additional information or documentary material (within the meaning of 16 C.F.R. § 803.20), Respondent shall not consummate the transaction until twenty (20) days after submitting such additional information or documentary material. Early termination of the waiting periods in this paragraph may be requested and, where appropriate, granted by letter from the Bureau of Competition. Provided, however, that prior notification shall not be required by this paragraph for a transaction for which notification is required to be made, and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. § 18a.
C. Within three (3) business days of any notification to the Commission required by Paragraphs IV. A. and IV. B. of this Order, Respondent shall deliver a copy of the Notification, return receipt requested, to the office of the Attorney General of each state in which any assets are located with respect to which notification to the Commission is required under Paragraphs IV. A and IV. B.
IT IS FURTHER ORDERED that:
A. Within thirty (30) days of the date on which the Respondent signs the Agreement Containing Consent Order and every thirty (30) days thereafter until Respondent has fully complied with the provisions of Sections II and III of this Order, Respondent shall submit to the Commission a verified written report setting forth in detail the manner and form in which it intends to comply, is complying, and has complied with Sections II, III, and IV of this Order. Respondent shall include in its compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with Sections II, III, and IV of the Order, including a description of all substantive contacts or negotiations for the divestitures and the identity of all parties contacted. Respondent shall include in its compliance reports copies of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning divestiture.
B. One (1) year from the date on which this Order is issued, annually for the next nine (9) years on the anniversary of the date this Order is issued, and at other times as the Commission may require, Respondent shall file a verified written report with the Commission setting forth in detail the manner and form in which it has complied and is complying with Section IV of this Order. Said report shall include, among other things, copies of all return receipts of all Notification forms sent to any state offices in compliance with Paragraph IV. C.
IT IS FURTHER ORDERED that Respondent shall notify the Commission at least thirty (30) days prior to any proposed change in the Respondent such as dissolution, assignment, sale resulting in the emergence of a successor entity, or the creation or dissolution of subsidiaries or any other change that may affect compliance obligations arising out of the Order.
IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order, upon written request to counsel, Respondent shall permit any duly authorized representative of the Commission:
A. Access, during office hours and in the presence of counsel, to inspect any facility and to inspect and copy all books, ledgers, accounts, correspondence, memoranda, and other records and documents in the possession or under the control of Respondent relating to any matters contained in this Order; and
B. Upon five (5) days' notice to counsel for Respondent, and without restraint or interference from Respondent, to interview officers, directors, or employees of Respondent, who may have counsel present, regarding such matters.
Signed this _____ day of _______________, 1998.
SERVICE CORPORATION INTERNATIONAL
FEDERAL TRADE COMMISSION