To protect the low-cost option and pro-consumer provisions of the contract, the FTC needs to step in, he said. Balto noted that the FTC has long been aggressive in combating funeral home abuses. Three decades ago it established the Funeral Practice rule that requires a broad range of consumer protections.
"You're talking about a consumer purchasing decision that's not discretionary," Balto said. Consumers are incredibly vulnerable. That's why enforcement is absolutely needed here. We can't expect the marketplace to correct if there is an exercise of market power."
The contract with the funeral practices committee makes funerals far more affordable, especially for those of limited means, he said. The standard Hines-Rinaldi price under the contract is $1,820 compared with the $5,000 to $6,000 that the group said SCI typically charges.
Other consumer benefits include relieving the deceased's family from having to go to the funeral home to sign a contract and not billing them for 30 days.
Lawyers for SCI did not respond to a request for comment. But company officials acknowledged when the deal was announced in June that some divestitures of cemeteries and funeral home locations were expected.
The companies' merger agreement allows SCI, the largest combined funeral home and cemetery operator in the U.S., to walk away from the deal if the required divestitures exceed $60 million in Ebitda, although company officials predicted the total earnings of properties ordered sold would be below that threshold.
Nationally, an organization representing funeral consumers is urging the FTC to challenge the deal. The Funeral Consumers Alliance said the cost savings that big retail chains typically generate for consumers do not exist in the funeral market, thus no efficiencies exist to offset the consumer harm posed by the deal.
The alliance said that complaints about SCI include allegedly lying about options in order to boost the funeral bill, digging up graves to re-sell them to unsuspecting families and denying the legal rights of LGBT [lesbian, gay, bisexual and transgendered] people to make funeral arrangements for their partners.
-- Written by Bill McConnell In Washington