UNITED STATES OF AMERICA
In the Matter of
SERVICE CORPORATION INTERNATIONAL, a corporation.
DOCKET NO. C-3869
DECISION AND ORDER
The Federal Trade Commission ("Commission") having initiated an investigation of the proposed acquisition by Service Corporation International ("SCI"), hereinafter sometimes referred to as "Respondent", of the outstanding voting securities of Equity Corporation International, and Respondent having been furnished with a copy of a draft complaint that the Bureau of Competition proposed to present to the Commission for its consideration, and which, if issued by the Commission, would charge Respondent with violations of the Clayton Act and Federal Trade Commission Act;
Respondent, its attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by Respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by Respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission's Rules; and
The Commission having thereafter considered the matter and having determined that it had reason to believe that Respondent violated the said Acts, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in § 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following Order:
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.
2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and over Respondent, and the proceeding is in the public interest.
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.
G. "Carriage" means Carriage Services, Inc., a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its offices and principal place of business located at 1300 Post Oak Boulevard, Houston, Texas 77056, and its subsidiary, Carriage Funeral Holdings, Inc., a Delaware Corporation operating and doing business at the same address as Carriage Services, Inc.
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 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.
Donald S. Clark
ISSUED: April 22, 1999
"ASSETS TO BE DIVESTED"
1. The following Funeral Service assets -
2. The following Cemetery Service assets -
such assets to include, but not be limited to,
UNITED STATES OF AMERICA
In the Matter of
SERVICE CORPORATION INTERNATIONAL, a corporation.
File No. 981 0353
ASSET MAINTENANCE AGREEMENT
This Asset Maintenance Agreement is by and between Service Corporation International, ("SCI"), 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, and the Federal Trade Commission, an independent agency of the United States Government, established under the Federal Trade Commission Act of 1914, 15 U.S.C. § 41, et seq.
Premises For Agreement
WHEREAS, on or about August 6, 1998, SCI entered into an agreement with Equity Corporation International ("ECI"), in which SCI agreed to acquire ECI (the "Acquisition"); and
WHEREAS, both SCI and ECI own or operate assets that provide funeral services or cemetery services to consumers; and
WHEREAS, the Commission is now investigating the Acquisition to determine whether the Acquisition would violate any of the statutes enforced by the Commission; and
WHEREAS, if the Commission accepts the Agreement Containing Consent Order to which this Appendix I is attached, the Commission is required to place it on the public record for a period of sixty (60) days for public comment and may subsequently withdraw such acceptance pursuant to the provisions of Section 2.34 of the Commission's Rules of Practice; and
WHEREAS, the purpose of this agreement and of the Consent Order is to preserve the Assets To Be Divested pending their divestiture to an acquirer or acquirers approved by the Commission, under the terms of the Consent Order, in order to remedy any anticompetitive effects of the Acquisition; and
WHEREAS, SCI's entering into this agreement shall in no way be construed as an admission by SCI that the Acquisition is illegal; and
WHEREAS, no act or transaction contemplated by this agreement shall be deemed immune or exempt from the provisions of the antitrust laws, or the Federal Trade Commission Act, by reason of anything contained in this agreement;
NOW, THEREFORE, in consideration of the Commission's agreement that, unless the Commission determines to reject the Consent Order, it will terminate SCI's obligation to give twenty (20) days' notice to the Commission's staff prior to consummating the Acquisition, the parties agree as follows:
Terms Of Agreement
1. SCI agrees to execute, and upon acceptance by the Commission of the Agreement Containing Consent Order for public comment agrees to be bound by, the Consent Order.
2. SCI agrees that from the date this agreement is accepted until the earliest of the dates listed in subparagraphs 2.a and 2.b, it will comply with the provisions of this agreement:
3. SCI shall maintain the viability, marketability, and competitiveness of the Assets To Be Divested, as listed in Schedule A of the Agreement Containing Consent Order, and shall not cause the wasting or deterioration of these assets, nor shall it cause the assets to be operated in a manner inconsistent with applicable laws, nor shall they sell, transfer, encumber or otherwise impair the marketability, viability, or competitiveness of the Assets. SCI shall conduct or cause to be conducted the business of the Assets To Be Divested in the regular and ordinary course and in accordance with past practice (including regular repair and maintenance efforts) and shall use its best efforts to preserve the existing relationships with each businesses' suppliers, customers, employees and others having business relations with such businesses, in the ordinary course of their business and in accordance with past practice. SCI shall not terminate the operation of any of the businesses identified within the Assets To Be Divested. SCI shall use its best efforts to keep the organization and properties of each of the businesses identified in the Assets To Be Divested intact, including current business operations, physical facilities, working conditions and a work force of equivalent size, training and expertise associated with each business. Included in the above obligations, SCI shall, without limitation:
4. Should the Federal Trade Commission seek in any proceeding to compel SCI to divest itself of any or all of the Assets To Be Divested, or to seek any other injunctive or equitable relief, SCI shall not raise any objection based upon the expiration of the applicable Hart-Scott-Rodino Antitrust Improvements Act waiting period or the fact that the Commission has not sought to enjoin the Acquisition. SCI also waives all rights to contest the validity of this agreement.
5. For the purpose of determining or securing compliance with this agreement, subject to any legally recognized privilege, and upon written request with reasonable notice to counsel for SCI, SCI shall permit any duly authorized representative of the Commission:
6. This Agreement shall not be binding until approved by the Commission.
FOR SERVICE CORPORATION INTERNATIONAL
FOR THE FEDERAL TRADE COMMISSION