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®: CRE Regulatory Action of the Week

When it Comes to Monopoly-Busting, There is No Resting in Peace for the Feds (Even if the Target Happens to be Involved in a Piously Inclined Business)

In this case, the federal agency doing the penalizing is the Federal Trade Commission. They contend that Service Corporation International (SCI) violated federal law prohibiting unfair methods of competition when SCI acquired the LaGrone Funeral Home in Roswell, New Mexico in 1994. At the time of the acquisition there were only two funeral homes in operation in Roswell, one of which-the Ballard Funeral Home-was already owned by SCI. According to the FTC the acquisition of the LaGrone Funeral Home gave SCI a monopoly on funeral home services in Roswell, thus violating federal anti-competition laws. According to the FTC notice, prices for funeral services increased in Roswell after the acquisition.

On September 28, 1999, prompted in no small measure by the FTC's investigation of the LaGrone acquisition, SCI sold the Ballard Funeral Home to Sentry Group Services, Inc. Provident Services, Inc., a financial subsidiary of SCI's, provided financing for Sentry's acquisition.

Due to these alleged anti-competition violations and to guarantee that competition is fully restored in Roswell, the FTC has proposed a consent agreement with SCI that would severely hamper their participation in the funeral home industry in Roswell for a very long time. Included in the agreement are the following provisions, quoted directly from the Federal Register Notice: "...if SCI acquires the Ballard Funeral Home pursuant to a default on Sentry's loan with Provident, SCI must divest Ballard to a Commission-approved buyer within 90 days. In the event SCI does not accomplish the divestiture within 90 days, the proposed Consent Order provides that the Commission may appoint a trustee to divest Ballard. Moreover, the proposed Consent Order prohibits Provident from sharing information obtained from Sentry with SCI....The Proposed Consent Order also provides that, for a period of ten years, SCI must give prior notice to the Commission of any proposed acquisition of a funeral home serving Chaves County, New Mexico, where Roswell is located."

SCI's business in Roswell was alive and well before the FTC's investigation. Now, thanks to these restrictions, it's possible that SCI's morticians might have only their own company's funeral to prepare before its business in Roswell eventually flatlines.

Click here to read the full notice in the Federal Register.

CRE invites all interested parties to submit comments on these issues to CRE's Interactive Public Docket.

Please click below to submit comments regarding Monopoly Busting.

Monopoly Busting: Interactive Public Docket

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