(Reuters) - The largest U.S. provider of funeral and cemetery services has agreed to sell some of its assets to resolve federal charges that a proposed $1.4 billion deal to buy a smaller rival would substantially lessen competition in the industry.
Houston-based Service Corp International in May announced a deal to buy Stewart Enterprises Inc.
SCI owns and operates more than 1,449 funeral-services locations and 374 cemeteries, including 213 combined funeral-services/cemetery locations, as well as 100 crematories, according to the U.S. Federal Trade Commission, which announced the terms on Monday.
Stewart is the second-largest funeral and cemetery services provider in the nation, with 217 funeral homes and 141 cemeteries in 24 states and Puerto Rico.
Although the two firms together now have only about 16 percent of the U.S. market, in certain communities their market share would be more dominant according to the FTC, which works with the U.S. Justice Department to ensure that mergers comply with antitrust law.
The Commission said the proposed tie-up was likely to substantially reduce competition in 59 local markets by eliminating direct competition between the two firms.
That, in turn, would allow the merged firm to unilaterally raise prices, and also increased the risk of collusion between SCI and its few remaining competitors, the FTC said.
The proposed order settling the FTC’s charges requires SCI and Stewart to sell the 53 funeral homes and 38 cemeteries to Commission-approved buyers within 180 days, and establishes various other conditions.
The agreement will be subject to a public comment period lasting through January 22.
Reporting by Ros Krasny; Editing by Bob Burgdorfer