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Service Corporation International (SCI), the nation’s largest provider of funeral and cemetery services, will be required to sell 22 funeral homes and four cemeteries in 19 local markets to ensure competition is preserved following its acquisition of Keystone North America Inc., the Federal Trade Commission announced today. The consent order detailing the requirements resolves the FTC’s concerns that the acquisition would be anticompetitive.

According to the FTC, SCI’s proposed acquisition of Keystone, the fifth-largest funeral and cemetery services provider in North America, raises antitrust concerns in the markets for both funeral services and cemetery services.

The 16 geographic funeral services markets affected by the acquisition include: Yuma, Arizona; Monterey, California; Denver, Colorado; Auburndale/Winter Haven, Florida; Vidalia, Georgia; Bossier City, Louisiana; Lansing, Michigan; East Aurora, New York; Northern Rockland County, New York; Charlotte, North Carolina; Greensboro, North Carolina; Columbia, South Carolina; West Columbia/Lexington, South Carolina; New Tazewell, Tennessee; Lynchburg, Virginia; and Yakima, Washington. The three geographic cemetery services markets are: Yuma, Arizona; Macon, Georgia; and Columbia, South Carolina.

The funeral and cemetery services markets in each of these local areas are highly concentrated, and SCI’s acquisition of Keystone as proposed would have eliminated the intense head-to-head competition between these firms in each of the 19 local geographic markets. The complaint alleges the transaction would have increased the likelihood that the combined firm could raise prices either unilaterally or through coordination with remaining competitors.

The FTC’s consent order requires that SCI sell the funeral homes and cemeteries to FTC-approved buyers within 90 days of SCI’s acquisition of Keystone. A complete list of the facilities can be found at the following link: http://www.ftc.gov/os/caselist/1010013/100325kystonefacilities.pdf. In addition to requiring SCI to sell the funeral homes and cemeteries, the order requires SCI to sell related equipment, customer and supply contracts, and other assets such as trade names and property in each of the markets at issue.

The proposed order contains several provisions to ensure that the divestitures are successful: 1) the FTC will evaluate all proposed buyers to ensure they will be able to compete effectively after SCI takes over Keystone; 2) if SCI fails to divest the assets within 90 days, the FTC will be able to appoint a trustee to ensure the assets are sold; 3) SCI must provide transitional services to the buyers the FTC approves to ensure a smooth transition of the assets and their continued operation; 4) the order requires SCI to remove any impediments that might prevent current managers of the 22 facilities from working for the new owner(s); and 5) SCI must maintain the viability of the facilities until the divestiture process is complete.

The Commission vote approving the issuance of the complaint and the proposed consent order was 4-0. The order will be subject to public comment for 30 days, until April 26, 2010, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://public.commentworks.com/ftc/sci/keystonenorthamerica.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $16,000.

Copies of the complaint, consent order, and an analysis to aid in public comment can be found on 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, DC 20580. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 091-0138)