Lawsuit alleges cemetery services acquisition would be anticompetitve

Nick Rees Nov. 30, 2009, 4:31pm


LAS VEGAS (Legal Newsline) - Nevada Attorney General Catherine Cortez Masto has filed a lawsuit alleging that the proposed purchase of Palm Mortuary, Inc., by Service Corporation International would violate federal and state antitrust laws.

Masto also alleges that the sale would reduce competition in the Las Vegas area market for cemetery services.

"Cemeteries involve major purchases, typically at an extremely difficult time when consumers are most vulnerable," Masto said. "It is critical to preserve competition in the cemetery market for local Las Vegas families."

To proceed with the acquisition, Masto is requiring SCI to divest most of its Las Vegas area assets. This divestment agreement and other related relief are reflected in two settlement papers - a Stipulated Judgment and an Order to Maintain Assets - which were also filed as part of the lawsuit.

SCI's acquisition of Palm Mortuary would have created a combined company that would control 76 percent of the Las Vegas area's cemetery services market, Masto says.

The lawsuit alleges that the acquisition would have eliminated direct competition between SCI and Palm Mortuary for cemetery services, leaving consumers with fewer choices as well as the prospect of higher prices or reduced levels of service.

The complaint also alleges that entry into the Las Vegas area market from new cemetery providers would not be timely, likely or sufficient to prevent the anticompetitive effects of the acquisition.

Palm Mortuary operates solely in the Las Vegas area and is the largest seller of cemetery services in the area. SCI, by way of its Davis Funeral Home and Memorial Park property, is the third-largest seller of local cemetery services in Las Vegas. SCI is also the nation's largest cemetery provider. Only one other meaningful cemetery provider operates in the Las Vegas area besides SCI and Palm Mortuary, Masto says.

The settlement papers, which are still subject to court approval, require SCI to sell its Davis Funeral Home and Memorial Park property as well as the pre-paid business derived from this property and another SCI owned Davis funeral home near University Medical Center within 90 days of its acquisition of Palm Mortuary to a buyer approved by Masto.

SCI, prior to selling its Davis assets, must also ensure their economic and competitive viability in accordance with past practices through a series of firewall protections.

SCI must also, for the next three years, provide notice to the attorney general of future acquisitions involving cemetery service or funeral service markets in Nevada where the company has a presence.

Reimbursement for fees and costs resulting from the investigation will be paid by SCI, which will also pay for any potential future investigations regarding compliance with the settlement papers. Non-compliance would subject SCI to monetary penalties, injunctive relief and other relief deemed appropriate by the court.

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