The Loewen Group, Inc.; Loewen Group International, Inc.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 931-0052]

The Loewen Group, Inc.; Loewen Group International, Inc.;

Proposed Consent Agreement With Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In the settlement of alleged violations of federal law

prohibiting unfair or deceptive acts or practices and unfair methods of

competition, this consent agreement, accepted subject to final

Commission approval, would require, among other things, the Covington,

Kentucky-based company to divest one of its three funeral homes in

Brownsville, Texas and divest a large funeral home in San Benito, Texas

or two smaller funeral homes in Harlingen, Texas. The Consent Agreement

settles allegations that Lowen's acquisition of certain funeral homes

in the Brownsville area and the Harlingen/San Benito area of Cameron

County, Texas would decrease competition and increase the likelihood of

collusion in those markets.

DATES: Comments must be received on or before July 22, 1996.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Thomas B. Carter, Dallas Regional Office, Federal Trade Commission, 100

N. Central Expressway, Suite 500, Dallas, TX 75201. (214) 767-5518.

Gary D. Kennedy, Dallas Regional Office, Federal Trade Commission, 100

N. Central Expressway, Suite 500, Dallas, TX 75201. (214) 767-5512.

James R. Golder, Dallas Regional Office, Federal Trade Commission, 100

N. Central Expressway, Suite 500, Dallas, TX 75201. (214) 767-5512.

James R. Golder, Dallas Regional Office, Federal Trade Commission, 100

N. Central Expressway, Suite 500, Dallas, TX 75201. (214) 767-5508.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), notice is hereby

given that the following consent agreement containing a consent order

to cease and desist, having been filed with and accepted, subject to

final approval, by the Commission, has been placed on the public record

for a period of sixty (60) days. Public comment is invited. Such

comments or views will be considered by the Commission and will be

available for inspection and copying at its principal office in

accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of

Practice (16 CFR 4.9(b)(6)(ii)).

Agreement Containing Consent Order

The Federal Trade Commission (``Commission'') having initiated an

investigation of the acquisition of the assets of Garza Memorial

Funeral Home, Inc. and Thomae-Garza Funeral Directors, Inc. by the

Loewen Group Inc., a corporation, and Loewen Group International, Inc.,

a corporation (hereinafter collectively referred to as ``Loewen''), and

it now appearing that Loewen is willing to enter into an agreement

containing an order to divest certain assets, and to cease and desist

from certain acts,

It is hereby agreed by and between Loewen, its duly authorized

officers and attorneys, and counsel for the Commission that:

1. Proposed respondent The Loewen Group Inc, is a corporation

organized, existing and doing business under and by virtue of the laws

of the province of British Columbia, Canada, with its office and

principal place of business located at 4126 Norland Avenue, Burnaby,

British Columbia, Canada V5G 3S8.

2. Proposed respondent Loewen Group International, Inc. is a

corporation organized, existing and doing business under and by virtue

of the laws of the State of Delaware, with its office and principal

place of business located at 50 East River Center Boulevard, Covington,

Kentucky 41011. Proposed respondent Loewen Group International, Inc. is

a wholly-owned subsidiary of The Loewen Group Inc.

3. Loewen admits all the jurisdictional facts set forth in the

draft of complaint.

4. Loewen waives:

a. Any further procedural steps;

b. The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

c. All rights to seek judicial review or otherwise to challenge or

context the validity of the order entered pursuant to this agreement;

and

d. Any claim under the Equal Access to Justice Act.

5. This agreement shall not become part of the public record of the

proceeding unless and until it is accepted by the Commission. If this

agreement is accepted by the Commission, it, together with the draft of

complaint contemplated thereby, will be placed on the public record for

a period of sixty (60) days and information in respect thereto publicly

released. The Commission thereafter may either withdraw its acceptance

of this agreement and so notify Loewen, in which event it will take

such action as it may consider appropriate, or issue and serve its

complaint (in such form as the circumstances require) and decision, in

disposition of the proceeding.

6. This agreement is for settlement purposes only and does not

constitute an admission by Loewen that the law has been violated as

alleged in the draft of complaint here, or that the facts as alleged in

the draft complaint, other than jurisdictional facts, are true.

7. This agreement contemplates that, if it is accepted by the

Commission, and if such acceptance is not subsequently withdrawn by the

Commission pursuant to the provisions of Sec. 2.34 of the Commission's

Rules, the Commission may, without further notice to Loewen, (1) issue

its complaint corresponding in form and substance with the draft of

complaint and its decision containing the following order to divest and

to cease and desist in disposition of the proceeding and (2) make

information public in respect thereto. When so entered, the order to

divest and to cease and desist shall have the same force and effect and

may be altered, modified, or set aside in the same manner and within

the same time provided by statute for other orders. The order shall

become final upon service. Delivery by the U.S. Postal Service of the

complaint and decision containing the agreed-to order to Loewen's

address as stated in this agreement shall constitute service. Loewen

waives any right it may have to any other manner of service. The

complaint may be used in construing the terms of the order, and no

agreement, understanding, representation, or interpretation not

contained in the order or the agreement may be used to vary or

contradict the terms of the order.

8. Loewen has read the proposed complaint and order contemplated

hereby. It understands that, once the order has been issued, it will be

required to file one or more compliance reports showing that it has

fully complied with the order. Loewen further understands that it may

be liable for civil penalties in the amount provided by law for each

violation of the order after it becomes final.

[[Page 25678]]

Order

I

It is ordered that, as used in this order, the following

definitions shall apply:

A. ``Loewen'' means The Loewen Group Inc. and Loewen Group

International, Inc., their directors, officers, employees, agents and

representatives, predecessors, successors and assigns, their

subsidiaries, divisions, groups and affiliates controlled by Loewen,

and the respective directors, officers, employees, agents,

representatives, successors and assigns of each.

B. ``Funeral'' means a group of services provided at the death of

an individual, the focus of which is some form of commemorative

ceremony of the life of the deceased at which ceremony the body is

present; this group of services ordinarily includes, but is not limited

to: the removal of the body from the place of death; its embalming or

other preparation; making available a place for visitation and viewing,

for the conduct of a funeral service, and for the display of caskets

and outside cases; and the arrangement for and conveyance of the body

to a cemetery or crematory for final disposition.

C. ``Funeral establishment'' means any facility that provides

funerals.

D. ``Properties to be Divested'' means all of the assets,

properties, business and goodwill, tangible and intangible, utilized

by: (a) either Thomae-Garza Funeral Directors, Inc. or both Pitts,

Kriedler-Ashcraft Funderal Directors, Inc. and Garza-Elizondo Funeral

Directors in Cameron County, Texas; and (b) either Garza Memorial

Funeral Home, Inc., Paragon Trevino Funeral Home, Inc., or Darling-

Mouser Funeral Home, Inc. in Cameron County, Texas; including, but not

limited to:

1. All right, title and interest in and to owned or leased real

property, together with appurtenances, licenses and permits;

2. All machinery, fixtures, equipment, furniture, tools and other

tangible personal property;

3. All right, title and interest in the trade name of any funeral

establishment;

4. All right, title and interest in the books, records and files

pertinent to the Properties to be Divested;

5. Vendor lists, management information systems, software,

catalogs, sales promotion literature, and advertising materials; and

6. All right, title, and interest in and to the contracts entered

into in the ordinary course of business with customers (together with

associated bids and performance bonds), suppliers, sales

representatives, distributors, agents, personal property lessors,

personal property lessees, licensors, licensees, consignors, and

consignees.

II

It is further ordered that:

A. Within twelve (12) months after the date this order becomes

final, Loewen shall divest, absolutely and in good faith, the

Properties to be Divested. The Properties to be Divested are to be

Divested only to an acquirer or acquirers that receive the prior

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

prior approval of the Commission. The purpose of the divestitures

required by this order is to ensure the continued use of the Properties

to be Divested as ongoing viable enterprises providing funerals and to

remedy the lessening of competition alleged in the Commission's

complaint.

B. Pending divestiture of the Properties to be Divested, Loewen

shall maintain the viability and marketability of the Properties to be

Divested and shall not cause or permit the destruction, removal, or

impairment of any assets or business of the Properties to be Divested,

except in the ordinary course of business and except for ordinary wear

and tear.

III

It is further ordered that:

A. If Loewen has not divested, absolutely and in good faith and

with the Commission's prior approval, the Properties to be Divested as

required by Paragraph II of this order within twelve (12) months after

the date this order becomes final, the Commission may appoint a trustee

to divest the Properties to be Divested. In the event the Commission or

the Attorney General brings an action pursuant to Section 5(1) of the

Federal Trade Commission Act, 15 U.S.C. Sec. 45(1), or any other

statute enforced by the Commission, Loewen shall consent to the

appointment of a trustee in such action. Neither the appointment of a

trustee nor a decision not to appoint a trustee under this Paragraph

shall 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 Section 5(1) of the Federal Trade

Commission Act, or any other statute enforced by the Commission, for

any failure by Loewen to comply with this order.

B. If a trustee is appointed by the Commission or a court pursuant

to Paragraph III.A. of this order, Loewen shall consent to the

following terms and conditions regarding the trustee's powers,

authorities, duties and responsibilities:

1. The Commission shall select the trustee, subject to the consent

of Loewen, which consent shall not be unreasonably withheld. The

trustee shall be a person with experience and expertise in acquisitions

and divestitures. If Loewen has not opposed, in writing, the selection

of any proposed trustee within ten (10) days after notice by the staff

of the Commission to Loewen of the identity of any proposed trustee,

Loewen shall be deemed to have consented to the selection of the

proposed trustee.

2. Subject to the prior approval of the Commission, the trustee

shall have the exclusive power and authority to divest the Properties

to be Divested.

3. The trustee shall have the power and authority to abrogate any

contract or agreement between Loewen and any individual which

restricts, limits or otherwise impairs the ability of such individual

to purchase the Properties to be Divested or to become a director,

officer, employee, agent or representative of any acquirer of the

Properties to be Divested.

4. Within ten (10) days after appointment of the trustee, and

subject to the prior approval of the Commission and, in the case of a

court-appointed trustee, of the court, Loewen shall execute a trust

agreement that transfers to the trustee all rights and powers necessary

to permit the trustee to effect the divestitures required by this

order.

5. The trustee shall have twelve (12) months from the date the

Commission approves the trust agreement described in Paragraph III.B.4

to accomplish the divestitures, which shall be subject to the prior

approval of the Commission. If, however, at the end of the twelve-month

period the trustee has submitted a plan of divestiture or believes that

divestiture can be accomplished 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; provided, however, that the

Commission may extend the divestiture period only two (2) times.

6. The trustee shall have full and complete access to the

personnel, books, records and facilities relating to the Properties to

be Divested, or any other relevant information, as the trustee may

request. Loewen shall develop such financial or other information as

such trustee may request and shall cooperate with the trustee. Loewen

shall take no action to interfere with or impede the trustee's

accomplishment of the divestitures. Any delays in divestiture caused by

Loewen shall extend the time

[[Page 25679]]

for divestiture under this Paragraph in an amount equal to the delay,

as determined by the Commission or for a court-appointed trustee, the

court.

7. The trustee shall use his or her best efforts to negotiate the

most favorable price and terms available in each contract that is

submitted to the Commission, subject to Loewen's absolute and

unconditional obligation to divest at no minimum price. The

divestitures shall be made in the manner and to the acquirer or

acquirers as set out in Paragraph II of this 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 or

entities selected by Loewen from among those approved by the

Commission.

8. The trustee shall serve, without bond or other security, at the

cost and expense of Loewen, on such reasonable and customary terms and

conditions as the Commission or the court may set. The trustee shall

have authority to employ, at the cost and expense of Loewen, such

consultants, accountants, attorneys, investment bankers, business

brokers, appraisers, and other representatives and assistants as are

reasonably necessary to carry out the trustee's duties and

responsibilities. The trustee shall account for all monies derived from

the divestitures 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 his or her services,

all remaining monies shall be paid at the direction of Loewen and the

trustee's power shall be terminated. The trustee's compensation shall

be based at least in a significant part on a commission arrangement

contingent on the trustee's divesting the Properties to be Divested.

9. Loewen 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

liabilities, losses, damages, claims, or expenses result from

misfeasance, gross negligence, willful or wanton acts, or bad faith by

the trustee.

10. If the trustee ceases to act or fails to act diligently, a

substitute trustee shall be appointed in the same manner as provided in

Paragraph III.A. of this order.

11. 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 order.

12. The trustee shall have no obligation or authority to operate or

maintain the Properties to be Divested.

13. The trustee shall report in writing to Loewen and to the

Commission every sixty (60) days concerning the trustee's efforts to

accomplish divestiture.

IV

It is further ordered that, for a period of ten (10) years from the

date this order becomes final, Loewen shall not, without providing

advance written notification to the Commission, directly or indirectly,

through subsidiaries, partnerships, or otherwise:

A. Acquire any stock, share capital, equity, or other interest in

any concern, corporate or non-corporate, engaged at the time of such

acquisition, or within the two years preceding such acquisition, in the

provision of funerals in Cameron County, Texas or within fifteen (15)

miles of the Cameron County, Texas line; or

B. Acquire any assets used for or used in the previous two years

for (and still suitable for use for) funeral establishments in Cameron

County, Texas or within fifteen (15) miles of the Cameron County, Texas

line.

Said notification shall be given on the Notification and Report

Form set forth in the Appendix to Part 803 of Title 16 of the Code of

Federal Regulations as amended (hereinafter referred to as ``the

Notification''), and shall be prepared and transmitted in accordance

with the requirements of that part, except that no filing fee will be

required for any such notification, notification shall be filed with

the Office of the Secretary of the Commission, notification need not be

made to the United States Department of Justice, and notification is

required only of Loewen and not of any other party to the transaction.

Loewen shall provide the Notification to the Commission at least thirty

(30) days prior to acquiring any such interest (hereinafter referred to

as the ``first waiting period''). If, within the first waiting period,

representatives of the Commission make a written request for additional

information, Loewen shall not consummate the acquisition until twenty

(20) days after substantially complying with such request for

additional information. Early termination of the waiting periods in

this paragraph may be requested and, where appropriate, granted by

letter from the Commission's Bureau of Competition.

Provided, however, that prior notification shall not be required by

this Paragraph IV of this Order for:

1. the construction or development by Loewen of a new funeral

establishment; or

2. any transaction for which notification is required to be made,

and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C.

Sec. 18a.

V

It is further ordered that:

A. Within sixty (60) days after the date this order becomes final

and every sixty (60) days thereafter until Loewen has fully complied

with the provisions of Paragraphs II or III of this order, Loewen shall

submit to the Commission a verified written report setting forth in

detail the manner and form in which it intends to comply, is complying,

and has complied with Paragraphs II and III of this order. Loewen shall

include in its compliance reports, among other things that are required

from time to time, a full description of the efforts being made to

comply with Paragraphs II and III of the order, including a description

of all substantive contacts or negotiations for the divestitures and

the identity of all parties contacted. Loewen shall include in its

compliance reports copies of all written communications to and from

such parties, all internal memoranda, and all reports and

recommendations concerning divestiture.

B. One (1) year from the date this order becomes final, annually

for the next nine (9) years on the anniversary of the date this order

becomes final, and at other times as the Commission may require, Loewen

shall file a verified written report with the Commission setting forth

in detail the manner and form in which it has complied and is complying

with Paragraph IV of this order. Such reports shall include, but not be

limited to, a listing by name and location of all acquisitions of

funeral establishments in the United States located within forty (40)

miles of a funeral establishment owned by Loewen at the time of the

acquisition, including but not limited to acquisitions due to default,

foreclosure proceedings or purchases in foreclosure, made by Loewen

during the twelve (12) months preceding the date of the report.

VI

It is further ordered that, for a period of ten (10) years from the

date this order becomes final, Loewen shall notify the

[[Page 25680]]

Commission at least thirty (30) days prior to any proposed change in

its organization, such as dissolution, assignment or sale resulting in

the emergence of a successor, or the creation or dissolution of

subsidiaries or any other change that may affect compliance obligations

arising out of this order.

VII

It is further ordered that, for the purpose of determining or

securing compliance with this order, subject to any legally recognized

privilege, and upon written request with reasonable notice to Loewen

made to its principal offices, Loewen shall permit any duly authorized

representative or representatives of the Commission:

A. Access, during the office hours of Loewen and in the presence of

counsel, to inspect and copy all books, ledgers, accounts,

correspondence, memoranda and other records and documents in the

possession or under the control of Loewen relating to any matters

contained in this order; and

B. Upon five (5) days' notice to Loewen and without restraint or

interference therefrom, to interview officers or employees of Loewen,

who may have counsel present, regarding such matters.

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement, subject to

final approval, to a proposed consent order from The Loewen Group Inc.

and Loewen Group International, Inc. (hereinafter collectively referred

to as ``Loewen'').

The proposed consent order has been placed on the public record for

sixty (60) days for reception of comments from interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and the comments received and will decide whether to withdraw

from the agreement or make final the agreement's proposed order.

The Commission's complaint in this matter charges Loewen with

violating Section 5 of the Federal Trade Commission Act, as amended,

and Section 7 of the Clayton Act, as amended, in connection with

Loewen's acquisitions of Garza Memorial Funeral Home, Inc., in

Brownsville, Texas, and Thomae-Garza Funeral Directors, Inc., in San

Benito, Texas.

The consent order contains provisions designed to remedy the

alleged violations.

Part I of the order contains the definitions of terms that are used

in the order.

Part II of the order requires that within twelve (12) months of the

date that the order becomes final, Loewen must divest: (1) either

Thomae-Garza Funeral Directors, Inc., or both Pitts, Kriedler-Ashcraft

Funeral Directors, Inc., and Garza-Elizondo Funeral Directors; and (2)

Garza Memorial Funeral Home, Inc., or Paragon Trevino Funeral Home,

Inc., or Darling-Mouser Funeral Home, Inc.

Part III of the order provides for the appointment of a trustee to

accomplish the divestitures required by the order if Loewen fails to

make timely divestitures.

Part IV of the order requires Loewen, for ten (10) years, to

provide written notification to the Commission prior to acquiring any

interest in a funeral home located in Cameron County, Texas, or within

fifteen (15) miles of the Cameron County, Texas, line.

Part V of the order requires Loewen to provide periodic compliance

reports until the divestitures are completed. Part V also requires

Loewen, for ten (10) years, to provide annual compliance reports

detailing how it is complying with Part IV of the order.

Part VI of the order requires Loewen, for ten (10) years, to notify

the Commission of any changes in corporate structure that might affect

compliance with the order.

Part VII of the order permits Commission representatives, for the

purpose of determining or securing compliance with the order, to have

access to Loewen's offices to inspect and copy documents and, upon five

days' notice, to interview Loewen's officers and employees.

The purpose of this analysis is to facilitate public comment on the

proposed order. It is not intended to constitute an official

interpretation of the agreement and proposed order, or to modify any of

their terms.

Donald S. Clark,

Secretary.

[FR Doc. 96-12819 Filed 5-21-96; 8:45 am]

BILLING CODE 6750-01-M