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Post date: November 17 1999

Ag Settles Nyc Funeral Home Monopoly Case

State Attorney General Spitzer today announced an out-of-court settlement with the world's largest funeral home operator, an action that should result in increased competition and lower prices for Jewish funerals in New York City.

Under the precedent-setting agreement, Service Corporation International (SCI), based in Houston, Texas, will sell three funeral homes in New York that specialize in providing services to persons of the Jewish Faith.

Currently, SCI owns four of the five funeral homes in Manhattan that arrange Jewish funerals, and seven of 18 homes in Brooklyn.

"This settlement will help restore competition to a segment of the funeral home industry that has been monopolized by one company for years." said Spitzer. "SCI's current prices are 30 to 40% higher than some independent homes. This settlement will result in more competition that should result in lower prices."

SCI entered the New York market in 1971 and has since come to dominate the Jewish funeral home business by buying up independent funeral home operators.

In addition to systematically buying Jewish funeral homes in the city, SCI took additional steps to control the market, including:

  • Entering into agreements with synagogues and many large burial societies which designated an SCI home as the "official" or "recommended" home;
  • Retaining the names of the formerly-independent homes to conceal its ownership and retain the appearance of competition to the public;
  • Entering into agreements with the former owners and key employees of the homes it bought, prohibiting them from working for or opening a competing home for up to 20 years

The agreement negotiated by Spitzer marks the first time that an antitrust complaint in the funeral industry has focused on a funeral home operator's ability to control a market for a particular religious group.

Spitzer had charged that SCI's monopoly had hurt consumers through increased prices. For example, the average cost of a funeral at Riverside Chapel in Manhattan has nearly doubled in the ten years since it was acquired by SCI.

In addition, SCI would raise casket prices after acquiring independent homes and eliminate caskets in lower price ranges. For instance, within one week of acquiring Plaza Memorial Chapel in Manhattan, SCI raised the casket prices there by amounts ranging from $100 to $2,500.

"With this agreement, we want to help insure that consumers are not taken advantage of during a time of great grief and vulnerability," Spitzer said.

Spitzer noted that Jewish religious law requires the dead to be buried very quickly, relatives are often precluded from investigating where they can get the lowest price for a funeral.

In addition to selling three of its funeral homes, SCI has agreed to:

  • Release the former owners and key employees of the independent homes from their agreements with SCI not to compete with the company;
  • Provide prior notification to the Attorney General of any plans to buy funeral homes over the next ten years; and
  • Pay the Attorney General's office $1.2 million to cover the cost of the investigation.

In response to Spitzer's actions, New York City Consumer Affairs Commissioner Jules Polonetsky said, "This is an important step towards more competitive funeral prices for New York consumers and will be particularly significant to Jewish consumers who have struggled with SCI's unfairly high prices. "New York's consumers owe a debt of gratitude to Attorney General Spitzer for breaking up the SCI monopoly and responding to the frustration that New Yorkers have felt when making plans for their loved ones."

The three SCI funeral homes which are to be sold are Plaza Memorial Chapel at 630 Amsterdam Avenue, Manhattan, and Kirschenbaum Brothers Funeral Home and Garlick Funeral Home, both at 1153 Coney Island Avenue in Brooklyn.

SCI cooperated fully with the Attorney General's investigation.

The case was handled by the head of Spitzer's Antitrust Bureau, Harry First, along with Assistant Attorneys General Richard Grimm and George Mesires. The A.G.'s office was assisted in its investigation by the law firm of Axinn, Veltrop and Harkrider.