Agency Alleged Board Hindered Competition by Prohibiting Advertising of Discounts
The Virginia Board of Funeral Directors and Embalmers has agreed to settle Federal Trade Commission charges that it violated federal law and restrained competition by prohibiting funeral directors and service providers licensed to conduct business in Virginia, referred to as Board licensees, from advertising discounts for funeral products and services. The FTC charged that a Board regulation, which prohibited Board licensees from advertising discounts for “preneed” funeral planning, deprived consumers of truthful information about prices for funeral products and services.
The Richmond-based Board consists of nine governor-appointed members – seven funeral service licensees and two “citizen members.” Funeral directors and other funeral service providers are prohibited from practicing in Virginia unless licensed by the Board. State law authorizes the Board to take disciplinary action against any funeral licensee who violates the Board’s regulations, which may result in the suspension or revocation of a license.
The Board regulation at issue stated: “No licensee engaged in the business of preneed funeral planning or any of his agents shall advertise discounts; accept or offer enticements, bonuses, or rebates; or otherwise interfere with the freedom of choice of the general public in making preneed funeral plans.” “Preneed” funeral plans are those which can be contracted prior to the death of the person whose funeral is being planned, and can be advantageous to consumers by allowing them time to compare prices and services among different funeral service providers.
According to the FTC’s complaint, the regulation: (1) deprived consumers of truthful information about prices for funeral services; (2) prevented funeral licensees from disseminating truthful information about the prices for their products and services; (3) deprived consumers of the benefits of price competition among Board licensees; and (4) resulted in some consumers paying higher prices for funeral services than they would have if the regulation had not been implemented.
The order bars the Board from prohibiting or restricting truthful price advertising, including enforcing any regulation that might prevent Board licensees from using truthful advertising to notify consumers of prices and discounts for funeral products and services. The Board is ordered to amend its rules to eliminate any such regulation. The Board also is required to publish the FTC’s order on its Web site and in its newsletter, and to deliver a copy of the order to each Board licensee. The consent order also contains standard reporting provisions to assist the FTC in monitoring the Board’s compliance with the order.
The Commission vote to accept the consent agreement was 5-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, until September 13, 2004, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, Room H-159, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.
Copies of the consent agreement and the Commission’s complaint are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC’s Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580, Electronic Mail: firstname.lastname@example.org; Telephone (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws, which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.
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