UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

SERVICE CORPORATION INTERNATIONAL, a corporation.

Docket No. ______

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Act ("FTC Act"), and by virtue of the authority vested in it by said Act, the Federal Trade Commission ("Commission"), having reason to believe that Service Corporation International ("SCI"), and Equity Corporation International ("ECI"), a corporation, have entered into an agreement in violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.  45, and that if the terms of such agreement, were they to be satisfied, would result in a violation of Section 5 of the Federal Trade Commission Act, and Section 7 of the Clayton Act, 15 U.S.C.  18, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its complaint, stating its charges as follows:

I. Respondent Service Corporation International

1. 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. Respondent SCI had sales in 1997 of approximately $2.4 billion.

2. Respondent SCI is, and at all times relevant herein has been, engaged in commerce, or in activities affecting commerce, within the meaning of Section 1 of the Clayton Act, 15 U.S.C.  12, and Section 4 of the Federal Trade Commission Act, 15 U.S.C.  44.

3. Respondent SCI is, and at all times relevant herein has been, engaged in the provision of (a) funeral services in the funeral service relevant geographic markets and (b) cemetery services in the cemetery service relevant geographic markets.

II. Equity Corporation International

4. ECI is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 415 South First Street, Lufkin, Texas 75901-3800. ECI had sales in 1997 of approximately $135 million.

5. ECI at all times relevant herein has been engaged in commerce, or in activities affecting commerce, within the meaning of Section 1 of the Clayton Act, 15 U.S.C.  12, and Section 4 of the Federal Trade Commission Act, 15 U.S.C.  44.

6. ECI at all times relevant herein has been engaged in the provision of (a) funeral services in the funeral service relevant geographic markets and (b) cemetery services in the cemetery service relevant geographic markets.

III. The Proposed Acquisition

7. On or about August 6, 1998, Respondent SCI and ECI entered into a formal agreement for Respondent SCI to acquire ECI. That agreement was subsequently amended on or about December 14, 1998. The price is approximately $ 578 million.

IV. Trade and Commerce

8. The relevant lines of commerce in which to analyze the proposed acquisition are

(a) funeral services and
 
(b) cemetery services.

9. The relevant sections of the country in which to analyze the proposed acquisition in connection with the provision of funeral services, and the total dollar volume in sales in each market, is as follows:

Funeral Service Markets Size of Market

a. Columbus, Georgia, and Phenix City, Alabama $14 million
 
b. Evansville, Indiana $11 million
 
c. Jacksonville Beach, Florida $1.8 million
 
d. Roseville, California $1.2 million
 
e. Ruskin and Sun City Center, Florida $1.6 million
 
f. West Pasco County and Tarpon Springs, Florida $7 million

10. The relevant sections of the country in which to analyze the proposed acquisition in connection with the provision of cemetery services, and the total dollar volume in sales in each market, is as follows:

Cemetery Service Markets Size of Market

a. Broward County, Florida $14.5 million
 
b. Chattanooga, Tennessee, and the neighboring north Georgia suburbs $4.3 million
 
c. Citrus County, Florida $1 million
 
d. Corpus Christi, Texas $3.8 million
 
e. Eugene and Springfield, Oregon $1.8 million
 
f. North Richmond, Virginia, and the northern, eastern and
western suburbs of Richmond $3.6 million
 
g. the South Bay area of San Diego, California $7.3 million
 
h. Summit County, Ohio $11 million

V. Entry Conditions

11. Entry into the relevant markets is difficult, and would not be timely, likely or sufficient to prevent anticompetitive effects.

VI. Concentration

12. The relevant markets are highly concentrated, whether measured by the Herfindahl-Hirschman Index ("HHI") or by two-firm or four-firm concentration ratios.

(a) In the funeral service markets:

(1) In Columbus, Georgia, and Phenix City, Alabama, the HHI will increases from about 2200 to about 3400;

(2) In Evansville, Indiana, the HHI will increase from about 2750 to about 3400;

(3) In Jacksonville Beach, Florida, the HHI will increase from about 7450 to about 10,000, resulting in a monopoly;

(4) In Roseville, California, the HHI will increase from about 5200 to about 10,000;

(5) In Ruskin and Sun City Center, Florida, the HHI will increase from about 3955 to about 6075, resulting in a duopoly;

(6) In West Pasco County and Tarpon Springs, Florida, the HHI will increase from about 2930 to about 4050.

(b) In the cemetery service markets:

(1) In Broward County, Florida, the HHI will increase from about 2800 to about 3750;

(2) In Chattanooga, Tennessee, and the neighboring north Georgia suburbs, the HHI will increase from about 2900 to about 5030;

(3) In Citrus County, Florida, the HHI will increase from about 5840 to about 10,000, resulting in a monopoly;

(4) In Corpus Christi, Texas, the HHI will increase from about 3550 to about 5050, resulting in a duopoly;

(5) In Eugene and Springfield, Oregon, the HHI will increase from about 4400 to about 4770;

(6) In North Richmond, Virginia, and the northern, eastern and western suburbs of Richmond, the HHI will increase from about 2760 to about 4530;
 
(7) In the South Bay area of San Diego, California, the HHI will increase form about 3970 to about 4660;

(8) In Summit County, Ohio, the HHI will increase from about 2350 to about 3450.

VII. Effects of the Acquisition

13. The acquisition may substantially lessen competition in the relevant markets in the following ways, among others:

(a) by eliminating direct competition between Respondent and ECI;

(b) by increasing the likelihood that Respondent will unilaterally exercise market power; and

(c) by increasing the likelihood of, or facilitating, collusion or coordinated interaction;

each of which increases the likelihood that the prices of funeral services or cemetery services will increase, and that services to customers of funeral services or cemetery services will decrease.

VIII. Violations Charged

14. The agreement described in Paragraph 7 constitutes a violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45, and the proposed acquisition, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission has caused this Complaint to be signed by the secretary and its official seal to be affixed in Washington, D.C., this _____ day of _______________, _____.


By the Commission.

Donald S. Clark
Secretary

SEAL