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The Deal: FTC Hears Jewish Group's Concern on Funeral Deal

Stocks in this article: SCI STEI

NEW YORK ( The Deal) -- Five months into the Federal Trade Commission's extended review of Service Corp. International's (SCI) proposed $1.4 billion purchase of funeral home rival Stewart Enterprises (STEI), staff from the agency and from the Maryland Attorney General's office recently met with a group of consumers and rabbis to hear concerns about the deal's effect on Jewish funerals in the Washington area.

The deal would create a chain consisting of 2,000 funeral homes and cemeteries, the largest in the country.

The group is concerned that the merger will result in the cancellation of a contract between Stewart-owned funeral home Hines-Rinaldi Funeral Home and the Jewish Funeral Practices Committee of Greater Washington. The group wants the FTC to require Hines-Rinaldi to be included in a package of divestitures the agency is expected to require as a condition of antitrust approval.

The committee negotiated a standard contract for funerals that offers several consumer protections and a lower cost. A lawyer for a Jewish group that is lobbying the FTC said Hines-Rinaldi's traditional Jewish funerals cost 60% less and save consumers more than $500,000 annually compared with those offered by the two SCI-owned Jewish funeral homes, which hold a 60% market share in the Washington metro area.

On Oct. 31, staff from the FTC and the Maryland attorney general's office took the rare step of meeting with more than 100 consumers and 13 rabbis from the Washington area to hear their concerns about the merger. The meeting was organized by the Jewish Community Relations Council of Greater Washington. The council is asking that the FTC require that as a condition of antitrust approval SCI divest Hines-Rinaldi, which provides over 230 funerals a year under the arrangement worked out with the Jewish Funeral Practices Committee, which consists of over 40 synagogues in the Washington area.

Antitrust lawyer David Balto, who represents the Jewish Community Relations Council in its efforts to convince the FTC to require the divestiture of Hines-Rinaldi, said the funeral home is a direct competitor to SCI's two Jewish-focused funeral homes, and SCI will have no incentive to retain the contract worked out by the Jewish Funeral Practices Committee.

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