Proposed Consent Agreement In the Matter of Service Corporation International and Stewart Enterprises, Inc.; File No. 131-0163
I congratulate the FTC for trying to address the problem, but, unfortunately, you have divested SCI of the wrong entity -- Sagel (already part of SCI) -- instead of Hines-Rinaldi, which is part of Stewart, to be acquired by SCI. Sagel is essentially a storefront operation which predominantly uses Danzanski's facilities. Sagel was acquired by SCI after previously running an independent funeral home. If Mr. Sagel buys his old business back, he will hardly be an independent competitor; he will, in effect, be the fox in the chicken coop,and will likely collude with SCI, his "former" employer. If someone else buys the divested business, they will have an undesirable asset which will be highly unlikely to survive or be capable of serving the Jewish community. Hines-Rinaldi, however, is a viable, broad-based facility serving both the general community and the Jewish community. While charging competitive prices for most funerals, it is able to use its excess capacity to offer low-priced funerals to meet Jewish religious requirements. Despite SCI claims, Hines-Rinaldi still makes a profit (albeit, smaller) on it long-time contract. They have not sought to keep renewing this contract as a "charitable" contribution, but because it makes incremental profits on each funeral under the contract. The Sagel "shell" operation, on the other hand, without a market in the general community, would not be able to survive on just the smaller profits from lower-priced Jewish funerals. The Sagel "independent" entity would also require a large investment in facilities (it currently has no chapel and inadequate space for other operations)to attract the Jewish community business now going to the well-equipped Hines-Rinaldi operation. The Jewish community would thus lose a vital resource and would ultimately be back paying noncompetitive market rates. Hines-Rinaldi, now owned by SCI (which would continue to own Danzansky), would no longer be allowed by SCI to offer low-priced funerals to the Jewish community, as it now does, since there would be no viable competitor offering low prices which SCI would need to match. I urge the FTC to change its order to require the divestiture of Hines-Rinaldi instead of Sagel.