UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
- Robert Pitofsky, Chairman
- Sheila F. Anthony
- Mozelle W. Thompson
- Orson Swindle
- Thomas B. Leary
In the Matter of
Service Corporation International, a corporation.
Docket No. C-
DECISION AND ORDER
The Federal Trade Commission having initiated an investigation of the acquisition by
Respondent Service Corporation International of the assets of LaGrone Funeral Home, and
Respondent having been furnished thereafter with a copy of a draft of Complaint that the
Bureau of Competition and the Southeast Region presented to the Commission for its
consideration and which, if issued by the Commission, would charge Respondent with
violations of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section
5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45; and
Respondent, its attorneys, and counsel for the Commission having thereafter executed an
Agreement Containing Consent Order ("Consent Agreement"), containing an
admission by Respondent of all the jurisdictional facts set forth in the aforesaid draft
of Complaint, a statement that the signing of said Consent Agreement is for settlement
purposes only and does not constitute an admission by Respondent that the law has been
violated as alleged in such Complaint, or that the facts as alleged in such Complaint,
other than jurisdictional facts, are true, 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 has violated the said Acts, and that a Complaint
should issue stating its charges in that respect, and having thereupon issued its
Complaint, and having accepted the executed Consent Agreement and placed such Consent
Agreement on the public record for a period of thirty (30) days for the receipt and
consideration of public comments, now in further conformity with the procedure described
in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission hereby makes the following
jurisdictional findings and issues the following Order:
- 1. Respondent Service Corporation International 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 of Respondent, and the proceeding is in the public interest.
IT IS ORDERED that, as used in this Decision and 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 acquisition by SCI of LaGrone Funeral Home.
D. "Funeral Services" 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 outer burial containers; and
arrangements for and conveyance of the body to a cemetery or crematory for final
- E. "Divested Assets" consists of Ballard Funeral Home, located in Roswell, New
Mexico, and all assets, leases, properties, permits (to the extent transferable), customer
lists, businesses and goodwill, tangible and intangible, related to or utilized as part of
Ballard Funeral Home.
- F. "Provident" means Provident Services, Inc., a subsidiary of SCI.
- G. "Sentry" means Sentry Group Services, Inc., which acquired the Divested
Assets on September 28, 1999.
IT IS FURTHER ORDERED that:
- A. For a period of ten (10) years from the date this Decision and 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, except for an interest obtained by
Provident to secure financing as provided in Paragraph III. D. of this Decision and Order,
in any concern, corporate or non-corporate, or any assets used or previously used (and
still suitable for use), engaged at the time of such acquisition, or within the two (2)
years preceding such acquisition, in the provision of funeral services in Chaves County,
- 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. Provident shall keep information received from or made available to Sentry
confidential from any person other than persons employed or retained by Provident who are
or are expected to be engaged in reviewing, evaluating, approving, structuring, or
administering the financing for Sentry. Provident shall not disclose any information
received from or made available to Sentry to any officer, employee, or director of SCI or
of any subsidiary or division of SCI other than Provident. Provident shall be permitted to
disclose information received from or made available to Sentry (a) upon the order of any
court or administrative agency, (b) upon the request or demand of a regulatory or other
authority having jurisdiction over Provident, (c) to the extent reasonably required in
connection with the exercise of any remedy under a loan agreement pertaining to any
financing provided to Sentry, (d) to Provident's auditors or legal counsel, (e) in
connection with the filing of any loan statement or similar document in connection with
any public record filed in connection with financing provided to Sentry, and (f) in
connection with any sale, participation, or syndication of any loan by Provident.
IT IS FURTHER ORDERED that:
- A. If Respondent re-obtains the Divested Assets by means of the interest held by
Provident, Respondent shall divest absolutely and in good faith the Divested Assets no
later than ninety (90) days from the date on which Respondent obtains such interest to
an acquirer ("the New Acquirer") that receives the prior approval of the
Commission and only in a manner that receives the prior approval of the Commission.
- B. For purposes of Paragraph III. A., Respondent shall take such actions as are
necessary to maintain the viability, marketability, and competitiveness of the Divested
Assets, pending the divestiture of the Divested Assets to the New Acquirer, 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 Paragraph III. A. of this Decision
and Order to the New Acquirer in a manner that preserves the assets' marketability,
viability, and competitiveness.
- C. The purposes of this Paragraph III 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 Divested Assets as an ongoing, viable enterprise engaged in the
same business in which it was engaged at the time of the Acquisition.
- D. For purposes of this Paragraph III., Provident shall be permitted to provide
financing for, and to take and hold a security interest in, the Divested Assets to the New
Acquirer, subject to the conditions set forth in Paragraph II. C. of this Decision and
Order. In the event that Provident exercises the right under a loan agreement relating to
financing provided to the New Acquirer to foreclose on a property, Provident shall divest
all title and other interests in the property obtained through foreclosure in the manner
set forth in Paragraph III of this Decision and Order. In the
event that SCI sells, divests, or otherwise disposes of Provident, and that SCI has no
officers, directors, or employees in common with Provident, then the provisions of this
Paragraph III. D., and of Paragraphs II. C. and V. A., shall no longer be operative.
IT IS FURTHER ORDERED that:
- A. If Respondent obtains the Divested Assets by means of the security interest that SCI
retains in the Divested Assets through its financing of the divestiture of the Divested
Assets by Provident and has not divested, absolutely and in good faith, the Divested
Assets within ninety (90) days, the Commission may appoint a trustee to accomplish the
required divestiture, at no minimum price, to an acquirer that receives the prior approval
of the Commission, and in a manner that receives the prior approval of the Commission.
- 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 or the Attorney General 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 Decision and Order.
- D. If a trustee is appointed by the Commission or a court pursuant to Paragraph IV. A.
or IV. B. of this Decision and Order, Respondent shall consent to the following terms and
conditions regarding the trustee's powers, duties, authority, and responsibilities:
- 1. The Commission shall select the trustee, subject to the consent of Respondent, which
consent shall not be unreasonably withheld. The trustee shall be a person with experience
and expertise in acquisitions and divestitures. If Respondent has not opposed, in writing,
including the reasons for opposing, the selection of any proposed trustee within ten (10)
days after notice by the staff of the Commission to Respondent of the identity of any
proposed trustee, Respondent shall be deemed to have consented to the selection of the
- 2. Subject to the prior approval of the Commission, the trustee shall have the exclusive
power and authority to divest the Divested Assets.
3. Within ten (10) days after appointment of the trustee, Respondent shall execute a trust
agreement that, subject to the prior approval of the Commission and, in the case of a
court-appointed trustee, of the court, transfers to the trustee all rights and powers
necessary to permit the trustee to effect the divestiture required by this Decision and
4. The trustee shall have twelve (12) months from the date the Commission approves the
trust agreement described in Paragraph IV. D. 3. to accomplish the divestiture, which
shall be subject to the prior approval of the Commission. If, however, at the end of the
twelve-month period, the trustee has submitted a plan of divestiture or believes that
divestiture can be achieved within a reasonable time, the divestiture period may be
extended by the Commission, or, in the case of a court-appointed trustee, by the court;
provided, however, the Commission may extend this period only two (2) times.
- 5. The trustee shall have full and complete access to the personnel, books, records and
facilities related to the Divested Assets or to any other relevant information, as the
trustee may request. Respondent shall develop such financial or other information as such
trustee may request and shall cooperate with the trustee. Respondent shall take no action
to interfere with or impede the trustee's accomplishment of the divestiture. Any delays in
divestiture caused by Respondent shall extend the time for divestiture under this
Paragraph in an amount equal to the delay, as determined by the Commission or, for a
court-appointed trustee, by the court.
- 6. The trustee shall use his or her best efforts to negotiate the most favorable price
and terms available in each contract that is submitted to the Commission, subject to
Respondent's absolute and unconditional obligation to divest expeditiously at no minimum
price. The divestiture shall be made in the manner and to the acquirer as set out in
Paragraph III of this Decision and Order; provided, however, if the trustee receives bona
fide offers from more than one acquiring entity, and if the Commission determines to
approve more than one such acquiring entity, the trustee shall divest to the acquiring
entity selected by Respondent from among those approved by the Commission; provided
further, however, that Respondent shall select such entity within five (5) days of
receiving notification of the Commission's approval.
- 7. The trustee shall serve, without bond or other security, at the cost and expense of
Respondent, on such reasonable and customary terms and conditions as the Commission or a
court may set. The trustee shall have the authority to employ, at the cost and expense of
Respondent, such consultants, accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives and assistants as are necessary to carry
out the trustee's duties and responsibilities. The trustee shall account for all monies
derived from the divestiture and all expenses incurred. After approval by the Commission
and, in the case of a court-appointed trustee, by the court, of the account of the
trustee, including fees for his or her services, all remaining monies shall be paid at the
direction of the Respondent, and the trustee's power shall be terminated. The trustee's
compensation shall be based at least in significant part on a commission arrangement
contingent on the trustee's divesting the Divested Assets.
- 8. Respondent shall indemnify the trustee and hold the trustee harmless against any
losses, claims, damages, liabilities, or expenses arising out of, or in connection with,
the performance of the trustee's duties, including all reasonable fees of counsel and
other expenses incurred in connection with the preparation for or defense of any claim,
whether or not resulting in any liability, except to the extent that such losses, claims,
damages, liabilities, or expenses result from misfeasance, gross negligence, willful or
wanton acts, or bad faith by the trustee.
- 9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall
be appointed in the same manner as provided in Paragraph IV. A. of this Decision and
- 10. The Commission or, in the case of a court-appointed trustee, the court, may on its
own initiative or at the request of the trustee issue such additional orders or directions
as may be necessary or appropriate to accomplish the divestiture required by this Decision
11. In the event that the trustee determines that he or she is unable to divest the
Divested Assets as described in Paragraph I. E. of this Decision and Order, the trustee
may divest such additional assets of Respondent in that geographic area as necessary to
satisfy the requirements of this Decision and Order.
12. The trustee shall have no obligation or authority to operate or maintain the Divested
13. The trustee shall report in writing to Respondent and the Commission every sixty (60)
days concerning the trustee's efforts to accomplish the divestiture.
IT IS FURTHER ORDERED that:
- A. In the event that Respondent obtains the Divested Assets because of the interest held
by Provident, 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 Paragraphs III and IV of this Decision and Order within thirty (30) days of
the date on which it obtains the Divested Assets and every thirty (30) days thereafter
until it has fully complied with Paragraphs III and IV of this Decision and 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 Paragraphs
III and IV of the Decision and Order, including a description of all substantive contacts
or negotiations for the divestiture 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
- B. On the first November fifteenth after the date on which this Decision and Order is
issued, annually for the next nine (9) years on November fifteenth, 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 this Decision and Order.
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 this Decision and Order.
IT IS FURTHER ORDERED that, for the purpose of determining or securing
compliance with this Decision and 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 Decision and 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.
IT IS FURTHER ORDERED that this Decision and Order shall terminate ten
(10) years from the date of its issuance.
By the Commission.
Donald S. Clark