____________________________________ 

UNITED STATES OF AMERICA 

BEFORE FEDERAL TRADE COMMISSION 

COMMISSIONERS: Deborah Platt Majoras, Chairman 

Pamela Jones Harbour 

Jon Leibowitz 

William E. Kovacic 

J. Thomas Rosch 

) 

In the Matter of ) 

) Docket No. C-3869 

Service Corporation International, ) 

a corporation. ) 

____________________________________) 

ORDER TO SHOW CAUSE AND ORDER MODIFYING ORDER 

[Public Record Version] 

The Commission’s Decision and Order in Docket C-3869 (“Order”) was issued on April 

22, 1999. On February 16, 2006, Respondent Service Corporation International (“Respondent” 

or “SCI”) filed a Notification and Report Form (“Notification”) pursuant to Paragraph IV of the 

Order, informing the Commission of its intent to exercise its foreclosure rights under the 

governing mortgages of certain funeral home properties located in Columbus, Georgia, and 

Phenix City, Alabama, currently owned by Memorial Operations Inc. (“Memorial”).1 SCI, the 

nation’s largest chain of funeral homes and cemeteries, already owns and operates funeral 

service businesses located in Columbus, Georgia, and in Phenix City, Alabama. The 

Commission, having initiated an investigation of the proposed exercise of foreclosure rights, 

now issues this Order to Show Cause and Order Modifying Order (“Modifying Order”). 

The Complaint in this matter arose out of SCI’s acquisition of Equity Corporation 

International (“ECI”), which was the nation’s fourth largest chain of funeral homes and 

1 Paragraph IV of the Order requires Respondent, among other things, to file a 

Notification with the Commission prior to acquiring any stock, share capital, equity or other 

interest in any concern engaged in the provision of funeral services, as defined, in specified 

relevant local geographic areas, including Columbus, Georgia, and Phenix City, Alabama. Order 

¶ IV.A.1.(a) 

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cemeteries prior to the acquisition. The Complaint charged that SCI’s acquisition of ECI would 

lessen competition in several relevant markets, including the provision of funeral services in 

Columbus, Georgia, and Phenix City, Alabama, in violation of Section 5 of the Federal Trade 

Commission Act, as amended, 15 U.S.C.§ 45, and Section 7 of the Clayton Act, as amended, 15 

U.S.C. § 18. Complaint ¶¶ 8, 9(a), 13 & 14. The Complaint alleges that the relevant funeral 

service markets, including the market consisting of Columbus, Georgia, and Phenix City, 

Alabama, were highly concentrated and that entry into these markets was difficult and would not 

be timely, likely or sufficient to prevent the anticompetitive effects that would otherwise result 

from the acquisition. Complaint ¶¶ 11, 12. At the time of the Complaint, both SCI and ECI 

owned two funeral homes in the Columbus-Phenix City market. In addition, SCI held the 

governing mortgages of the Memorial funeral homes in the market. 

SCI consented to the Order addressing the competitive concerns arising from the 

acquisition. The Order required SCI, among other things, to divest funeral service assets and 

businesses in several relevant local geographic areas, including the Columbus, Georgia, and 

Phenix City, Alabama, market. SCI was required to divest the ECI funeral homes in the 

Columbus-Phenix City Market. SCI has fully complied with its divestiture obligations under the 

Order. The prior notification requirement in Paragraph IV of the Order addressed concerns that, 

given the small size of transactions that could have adverse competitive effects in the local 

geographic markets in issue in this case, there was a credible risk that, but for the requirement, 

SCI could engage in future anticompetitive mergers that would fall below the Hart-Scott-Rodino 

Act premerger reporting threshold. As the Commission explained in the Statement of Federal 

Trade Commission Policy Concerning Prior Approval and Prior Notice Provisions (“Prior 

Approval Policy Statement”), the need for a prior notification requirement “will depend on 

circumstances such as the structural characteristics of the relevant markets, the size and other 

characteristics of the market participants, and other relevant factors.” See Prior Approval Policy 

Statement, 60 Fed. Reg. 39,745-47 (Aug. 3, 1995); 4 Trade Reg. Rep. (CCH) ¶ 13,241. 

Information contained in SCI’s Notification and supplemental submissions, and other 

information available to the Commission, indicates that competitive conditions in the funeral 

service market in Columbus, Georgia, and Phenix City, Alabama, remain similar to the 

conditions that existed when the Commission ordered divestitures in 1999. It further appears 

there is reason to believe that Respondent’s exercise of its foreclosure rights in a manner that 

maintains control of the Memorial funeral service properties in Phenix City and Columbus 

would have a competitive impact similar to that of the original SCI-ECI transaction in the 

Columbus-Phenix City area. SCI also holds the mortgage on a third funeral home owned by 

Memorial, the Pearson-Treadwell Funeral Home in Blackshear, Georgia. The PearsonTreadwell home is not in a geographic market relevant to this Order but it is managed jointly 

with the Columbus and Phenix City homes. SCI has represented that it has no desire to own, 

control or retain an interest in the Memorial funeral home properties; rather, it seeks to execute a 

sale of the properties that would result in proceeds to be credited toward the underlying loan 

obligations of Memorial to SCI. To facilitate such a sale, SCI seeks to exercise its foreclosure 

rights with respect to such properties and has agreed to be bound by a further order to divest. 

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In view of the foregoing, the Commission has determined in its discretion that it is in the 

public interest to reopen the proceeding in Docket No. C-3869, pursuant to Section 3.72(b) of the 

Commission’s Rules of Practice, 16 CFR §3.72(b), and to modify the Order in this case by 

adding the following provisions, set forth as Paragraph VIII, which, among other things, require 

Respondent immediately to hold separate and to divest, through a trustee, any Memorial 

properties that it obtains pursuant to foreclosure on the mortgages governing such properties, or 

through any other means. 

In addition, the Order contains a typographical error in the seventh and final paragraph of 

the Order, which is numbered “VI” and should be numbered “VII.” This typographical error in 

the Order should also be corrected. 

Respondent SCI has responded that it consents to the changes contained in this Modifying 

Order, and has waived any further rights it may have under Section 3.72(b) of the Commission’s 

Rules of Practice, 16 C.F.R § 3.72(b). Accordingly, 

IT IS ORDERED that this matter be, and it hereby is, reopened; and 

IT IS FURTHER ORDERED that the Order in Docket No. C-3869 be, and it hereby is, 

modified to correct the numbering of the seventh (7th) paragraph from “VI” to “VII,” and to add a 

new eighth (8th) paragraph, that shall read as follows: 

VIII. 

IT IS FURTHER ORDERED that 

A. As used in this Order, the following additional definitions shall apply: 

1. “Closing Date(s)” means the date(s) on which divestiture of one or more of 

the Memorial Funeral Homes, as applicable, to a Commission-approved 

acquirer or acquirers, and in a manner that satisfies the requirements of this 

Order, is consummated. 

2. “Hold Separate Period” means the time period beginning immediately upon 

consummation of the Memorial Acquisition and ending the day after the 

Closing Date for the last divestiture of the Memorial Funeral Homes, 

except that the Hold Separate Period shall not include any period after the 

Closing Dates for the divestitures of the McMullen Funeral Home and the 

Colonial Funeral Home have both occurred. 

3. “Hold Separate Business” means the Memorial Funeral Homes, 

individually and collectively, until all required divestitures are completed; 

except that Hold Separate Business shall not include any Memorial Funeral 

Home that has been finally divested pursuant to this Modifying Order, and 

shall not include the Pearson-Treadwell Funeral Home if both the 

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McMullen Funeral Home and the Colonial Funeral Home have been finally 

divested. 

4. “Memorial Acquisition” means Respondent’s proposed acquisition, 

directly or indirectly, through foreclosure proceedings or otherwise, of any 

assets of, or stock, share capital, equity or other interest in the Memorial 

Funeral Homes. 

5. “Memorial Funeral Homes” means the Funeral Service assets and 

businesses, and all assets, leases, properties, permits (to the extent 

transferable), contracts (including pre-need Funeral Service contracts), 

customer lists, businesses and goodwill, tangible and intangible, related to 

or utilized in the businesses operated at the following locations: 

a. Colonial Funeral Home, 613 Fourteenth Street, Phenix City, 

Alabama 36867; 

b. McMullen Funeral Home, 3874 Gentian Boulevard, Columbus, 

Georgia 31907; and 

c. Pearson Treadwell Funeral Home, 659 Main Street, Blackshear, 

Georgia 31516. 

6. “Memorial Funeral Homes Confidential Business Information” means all 

information relating to the Memorial Funeral Homes that is not in the 

public domain and was not otherwise known to Respondent prior to 

consummation of the Memorial Acquisition, including all business and 

proprietary information, including, but not limited to, information 

regarding finances, inventory, sales, marketing, business plans, cost, 

pricing, supply, sales, profits, customers and contracts, except for any 

information that Respondent demonstrates (a) was or becomes generally 

available to the public other than as a result of a disclosure by Respondent 

or (b) was available, or becomes available, to Respondent on a nonconfidential basis, but only if, to the knowledge of Respondent, the source 

of such information is not in breach of a contractual, legal, fiduciary, or 

other obligation to maintain the confidentiality of the information. 

7. “Modifying Order” means the Order to Show Cause and Order Modifying 

Order in Docket No. C-3869 issued on December 27, 2006. 

8. “Order” means the Decision and Order in Docket No. C-3869, issued by 

the Commission on April 22, 1999. 

9. “Orders” means the Modifying Order and the Order, individually and 

collectively. 

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10. “Pre-need Contract” means any type of contract or other agreement to 

provide funeral services or merchandise at a future time, regardless of 

whether such agreement is revocable, or how payment for such services is 

arranged. 

11. “Select Respondent Employee” means an employee of Respondent’s 

corporate development department who is regularly involved in the 

purchase and sale of businesses for Respondent and has no responsibilities 

for the ongoing operation or marketing of Respondent’s funeral home 

properties. 

12. “Trustee” means the Hold Separate and Divestiture Trustee appointed by 

the Commission pursuant to this Modifying Order. 

13. “Trustee Agreement” means any agreement between a Commissionappointed Trustee and the Respondent that receives the prior approval of 

the Commission. 

B. Immediately upon consummation of the Memorial Acquisition and during the 

Hold Separate Period, Respondent SCI shall hold the Hold Separate Business 

separate and apart from all of Respondent’s other businesses and employees, as 

required by this Modifying Order, and shall not exercise direction or control over, 

or influence directly or indirectly, the Hold Separate Business, any of its 

operations or employees, or the Trustee, except to the extent necessary to assure 

compliance with the Orders and all applicable law. 

C. In complying with the terms and conditions of this Modifying Order, Respondent 

shall: 

1. not have access to, receive, obtain, solicit or use any Memorial Funeral 

Homes Confidential Business Information (“confidential information”) for 

any reason or purpose, except that the Trustee may, in consultation with 

Commission staff, disclose confidential information to Select Respondent 

Employees as necessary to fulfill the duties of the Trustee, or as necessary 

to permit SCI to oversee compliance with applicable laws or prepare 

United States consolidated financial reports, tax returns, reports required by 

securities laws and personnel reports, provided however, that prior to 

receiving confidential information a Select Respondent Employee shall 

execute a Confidentiality Agreement agreeing i) to use such information 

only for the limited purposes stated in the Order, and ii) not to divulge the 

confidential information; and 

2. not permit any of its employees, officers, or directors to be involved in the 

operations or divestiture operations of the Memorial Funeral Homes, 

except to the extent specifically provided in this Modifying Order. 

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D. Respondent shall take such actions as are necessary to maintain the viability, 

marketability, and competitiveness of the Hold Separate Business, and shall 

prevent the destruction, removal, wasting, deterioration, sale, disposition, transfer 

or impairment of the Hold Separate Business, except for ordinary wear and tear 

and as otherwise would occur in the ordinary course of business. Respondent’s 

responsibilities shall include, but are not limited to, providing the Hold Separate 

Business with sufficient working capital to operate at least at current rates of 

operation, and such other funds and resources as are necessary to maintain the 

viability, marketability and competitiveness of the Memorial Funeral Homes. 

E. Respondent shall divest the Hold Separate Business absolutely and in good faith, at 

no minimum price, to an acquirer or acquirers that receive(s) the prior approval of 

the Commission, and in a manner that receives the prior approval of the 

Commission, within sixty (60) days of the date on which the Memorial Acquisition 

is consummated, pursuant to and as required by the terms of this Modifying Order, 

provided however, this period may be extended by the Commission pursuant to 

Paragraph VIII.F.2.d.(2). 

F. Respondent shall hold the Hold Separate Business separate, apart, and 

independent; consent to the appointment of a Hold Separate and Divestiture 

Trustee (“Trustee”); execute a Trustee Agreement that receives the prior approval 

of the Commission; and consent to divestiture of the Memorial Funeral Homes by 

the Trustee, absolutely and at no minimum price, on the following terms and 

conditions: 

1. Thomas H. Johnson, Johnson Consulting Group, shall serve as the Trustee 

pursuant to the Trustee Agreement executed by the Trustee and 

Respondent SCI, attached hereto as Confidential Appendix I to the Orders. 

This Trustee Agreement shall not be modified without the prior approval of 

the Commission. 

2. Respondent shall, pursuant to the Trustee Agreement, which shall be 

contingent and effective upon Respondent’s consummation of the 

Memorial Acquisition, transfer to and confer upon the Trustee all rights, 

powers, and authorities necessary to permit the Trustee to perform the 

Trustee’s duties and responsibilities pursuant to this Modifying Order to: 

(i) manage and maintain the Hold Separate Business pending divestiture; 

(ii) divest the Hold Separate Business in a manner consistent with the 

requirements of this Modifying Order, and (iii) monitor Respondent’s 

compliance with the hold separate and asset maintenance requirements of 

this Modifying Order in a manner consistent with the purposes of the 

Orders. 

a. The Trustee Agreement shall require that the Trustee shall act in a 

fiduciary capacity for the benefit of the Commission. 

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b. The Trustee shall serve, without bond or other security, at the cost 

and expense of Respondent. 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. 

c. The Trustee Agreement shall transfer and convey to the Trustee, 

and the Trustee shall have, all rights, powers and authorities 

necessary to manage and maintain the Hold Separate Business 

pending divestiture in a manner consistent with the purposes of the 

Orders, and in consultation with Commission staff. 

(1) The Trustee shall have the responsibility, consistent with the 

requirements and purposes of this Modifying Order, for (i) 

managing the Hold Separate Business independently from 

Respondent’s other businesses and operations, (ii) 

maintaining the Hold Separate Business, and (iii) 

monitoring Respondent’s compliance with its hold separate 

and asset maintenance obligations pursuant to this 

Modifying Order. 

(2) The Trustee Agreement shall require that during the Hold 

Separate Period, the Trustee shall: 

(a) assure that the Hold Separate Business is managed, 

operated and maintained in the regular and ordinary 

course, in accordance with past practice, (including 

regular repair and maintenance efforts), and all 

applicable laws; and 

(b) use best efforts to preserve the existing relationships 

with suppliers, customers, employees and others 

having business relations with the Hold Separate 

Business. 

(3) Respondent shall provide the Hold Separate Business with 

sufficient financial and other resources as are appropriate in 

the judgment of the Trustee to operate the Hold Separate 

Business at no less than current rates of operation and to 

maintain the viability, marketability and competitiveness of 

the Hold Separate Business pending divestiture. 

d. The Trustee Agreement shall transfer and convey to the Trustee, 

and the Trustee shall have, the exclusive power and authority to 

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divest the Hold Separate Business in a manner consistent with the 

requirements and purposes of the Orders, and in consultation with 

Commission staff. 

(1) The Trustee shall divest the Hold Separate Business and at 

no minimum price to an acquirer or acquirers that receive(s) 

the prior approval of the Commission, and in a manner that 

receives the prior approval of the Commission. 

(2) The Trustee shall have sixty (60) days from the effective 

date of the Memorial Acquisition to divest the Hold 

Separate Business, subject to the prior approval of the 

Commission. If, however, at the end of the sixty (60) day 

period, the Trustee has submitted a plan of divestiture or if 

the Commission believes that the 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. 

(3) Respondent shall take no action to interfere with or impede 

the Trustee’s accomplishment of the divestitures. 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. 

(4) The Trustee shall use commercially reasonable best efforts 

to negotiate the most favorable price and terms available for 

the divestiture of the Hold Separate Business in each 

contract that is submitted to the Commission, subject to 

Respondent’s absolute and unconditional obligation to 

divest expeditiously and at no minimum price. Each 

divestiture shall be made only in a manner that receives the 

prior approval of the Commission and only to an acquirer 

that receives the prior approval of the Commission as 

required by this Modifying 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 after receiving notification of the 

Commission’s approval. 

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(5) 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 

the Trustee’s services, all remaining monies shall be paid at 

the direction of the Respondent, and the Trustee’s power 

shall be terminated. The compensation of the Trustee shall 

be based at least in significant part on a commission 

arrangement contingent on the divestiture of all of the 

relevant assets that are required to be divested by this 

Modifying Order. 

e. The Trustee shall have, upon request, full and complete access to 

information and personnel of Respondent, and to the personnel, 

books, records and facilities of Respondent related to the Hold 

Separate Business, and to any other relevant information as the 

Trustee may request, to the extent necessary to facilitate the 

management, operation, maintenance, and divestiture of the Hold 

Separate Business, subject to any demonstrated legally recognized 

privilege and to the limitations contained in this Modifying Order. 

Respondent shall develop such financial or other information as the 

Trustee may request and shall cooperate with the Trustee. 

f. The Trustee shall not provide Memorial Funeral Homes 

Confidential Business Information to any employee or 

representative of Respondent except as provided for elsewhere in 

this Modifying Order. 

g. 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. 

3. Respondent shall cooperate with the Trustee and take no action to interfere 

with or impede the Trustee’s ability to perform the Trustee’s duties and 

responsibilities consistent with the terms of this Modifying Order and with 

the terms of the Trustee Agreement. 

4. Respondent may require the Trustee and each of the Trustee’s consultants, 

accountants, attorneys and other representatives and assistants to sign a 

9
customary confidentiality agreement; provided, however, such agreement 

shall not restrict the Trustee from providing any information to the 

Commission. 

5. The Commission may, among other things, require the Trustee and each of 

the Trustee’s consultants, accountants, attorneys and other representatives 

and assistants to sign an appropriate confidentiality agreement related to 

Commission materials and information received in connection with the 

performance of the Trustee’s duties. 

6. The Trustee shall serve until the day after the end of the Hold Separate 

Period; provided, however, that the Commission may extend or modify this 

period as may be necessary or appropriate to accomplish the purposes of 

the Orders. 

7. Thirty (30) days after the effective date of the Commission-approved 

Trustee Agreement, and every thirty (30) days thereafter until the 

divestiture(s) of the Hold Separate Business have been completed, the 

Trustee shall report in writing to the Commission concerning: 

a. the Trustee’s management and maintenance of the Hold Separate 

Business, including an assessment of the financial, operational and 

regulatory status of each funeral home, and Respondent’s 

compliance with its hold separate and asset maintenance obligations 

pursuant to this Modifying Order, and 

b. the Trustee’s efforts to accomplish the divestiture(s). 

8. The appointment of the Trustee pursuant to this Modifying Order shall not 

preclude the Commission or the Attorney General from seeking civil 

penalties or any other relief available to it, including a court-appointed 

trustee, pursuant to § 5(l) of the Federal Trade Commission Act, 15 U.S.C. 

§ 45(l), or any other statute enforced by the Commission, for any failure by 

Respondent to comply with the Orders. In the event that the Commission 

or the Attorney General brings an action pursuant to § 5(l) of the Federal 

Trade Commission Act, 15 U.S.C. § 45(l), or any other statute enforced by 

the Commission, Respondent shall consent to the appointment of a trustee 

in such action. 

9. If the Commission determines that the Trustee has ceased to act or failed to 

act diligently and consistent with the Trustee Agreement or the purposes of 

this Modifying Order, the Commission may appoint a substitute Trustee 

consistent with the terms of this Modifying Order, subject to the consent of 

Respondent, which consent shall not be unreasonably withheld. If 

Respondent has not opposed, in writing, including the reasons for 

10
opposing, the selection of the substitute Trustee within ten (10) days after 

written notice by the staff of the Commission to Respondent of the identity 

of any substitute Trustee, Respondent shall be deemed to have consented to 

the selection of the proposed substitute Trustee. Respondent and the 

substitute Trustee shall execute a Trustee Agreement, subject to the 

approval of the Commission, that is consistent with these Orders and with 

the terms and conditions of the Trustee Agreement attached as Confidential 

Appendix I. 

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 

divestitures required by this Modifying Order. 

G. Respondent shall not, prior to divestiture of the Hold Separate Business, employ or 

offer employment to any employee(s) of the Hold Separate Business; provided, 

however, that Respondent may offer a position to an employee of the Hold 

Separate Business if the proposed acquirer of such funeral home has determined 

not to offer a position to that employee. 

H. For the remaining term of the Order, Respondent shall not: 

1. directly or indirectly, solicit, induce, or attempt to solicit or induce any 

employees of the Hold Separate Business who have accepted offers of 

employment with a Commission-approved acquirer to terminate their 

employment relationship with the acquirer; provided, however, a violation 

of this provision will not occur if: (1) the individual’s employment has 

been terminated by the acquirer, (2) Respondent advertises for employees 

in newspapers, trade publications, or other media not targeted specifically 

at the employees, or (3) Respondent hires employees who apply for 

employment with Respondent, as long as such employees were not 

solicited by Respondent in violation of this provision; or 

2. directly or indirectly, solicit, induce, or attempt to solicit or induce a 

consumer who has a Pre-need Contract with the Memorial Funeral Homes, 

as defined above, to terminate such contract and enter into a Pre-need 

Contract with Respondent; provided, however, a violation of this provision 

will not occur if: (1) a consumer initiates communications with Respondent 

regarding a Pre-need Contract; or (2) Respondent advertises in newspapers, 

trade publications, or other media in a manner not targeted specifically at 

customers of the Hold Separate Business. 

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I. The purpose of Paragraph VIII of this Modifying Order is to: (1) preserve the Hold 

Separate Business as viable, competitive and ongoing businesses independent of 

Respondent and engaged in the provision of Funeral Services pending divestiture; 

(2) ensure that no Memorial Funeral Homes Confidential Business Information is 

transmitted to or received by Respondent except in accordance with the provisions 

of this Modifying Order; (3) prevent interim harm to competition pending 

divestiture; and (4) remedy the lessening of competition resulting from 

Respondent’s acquisition of the Hold Separate Business. 

By the Commission. 

Donald S. Clark 

Secretary 

SEAL 

ISSUED: December 27, 2006 

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Confidential Appendix I

Hold Separate and Divestiture Trustee Agreement

[Redacted From the Public Record Version But Incorporated By Reference]

In the Matter of Service Corporation International, Docket No. C-3869

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