Loewen Group Inc

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IN THE MA TIER OF THE LOEWEN GROUP INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 7 OF THECLA YTON ACT AND SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3678. Complaint, July 29, 1996--Decision, July 29, 1996 This consent order requires, among other things, a Kentucky-based company to divest, within nine months, a funeral home in Castlewood, Virginia to a Commission-approved acquirer. If the transaction is not completed as required, the Commission may appoint a trustee to divest the property. Appearances For the Commission: Gary D. Kennedy and James R. Golden. For the respondents: Deborah Feinstein, Arnold & Porter, Washington, D.C. · COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act ("FTC Act"), and by virtue of the authority vested in it by said Act, the Federal Trade Commission ("Commission"), having reason to believe that The Loewen Group Iric., a corporation, and Loewen Group International, Inc., a corporation, hereinafter sometimes referred to as respondents, have entered into an agreement with Heritage Family Funeral Services, Inc., a corporation, that violates said Act; that through the agreement respondents have agreed to acquire Heritage Family Funeral Services, Inc. and that such acquisition, if consummated, would violate Section 7 of the Clayton Act and Section 5 of the FTC Act; and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges as follows:

I. DEFINITION 1. For the purposes of this complaint, the following definition shall apply:- · THE LOEWEN GROUP INC., ET AL. 23 22 Complaint "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. 11. THE RESPONDENTS 2. Respondent The Loewen Group Inc. ("Loewen Group") 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. 3. Respondent Loewen Group International, Inc. ("Loewen Group International"), 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 ofbusiness located at 50 East River Center Boulevard, Covington, Kentucky. Respondent Loewen Group International is a wholly-owned subsidiary of Respondent Loewen Group.

4. Loewen Group and Loewen Group International are, and at all times relevant herein have been, engaged .in commerce, as "commerce" is defmed in Section 1 of the Clayton Act, as amended, 15 U.S.C. 12, and are corporations whose businesses are in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, as amended, 15 U.S.C. 44.

III. ACQUIRED COMPANY 5. Heritage Family Funeral Services, Inc. ("Heritage"), is a corporation organized, existing and doing business under and by virtue of the laws of the State of Tennessee, with its office and principal place of business located at 300 Broad Street, Citizens Plaza, Suite 300 Elizabethton, Tennessee. 6. Heritage is, and at all times relevant herein has been, engaged in commerce, as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 y.s.c. 12, and is a corporation whose business Complaint 122 F.T.C. is in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, as amended, 15 U.S.C. 44.

IV. THE PROPOSED ACQUISITION 7. On or about January 26, 1993, Loewen Group through its wholly-owned subsidiary Loewen Group International entered into an agreement with Heritage to acquire 160% of the voting securities of Heritage. ' V. THE RELEVANT MARKET 8. The relevant line of commerce in which to analyze the proposed acquisition of Heritage is the provision of funerals. 9. The relevant section of the country in which to analyze the proposed acquisition is Castlewood, Virginia, and its immediate environs ("Castlewood area").

10. The relevant market set forth in paragraphs eight and nine is concentrated, whether measured by the Herfindahl-Hirschmann Index or by two-firm concentration ratios.

11. Entry into the market is difficult.

12. In the relevant market, both Loewen Group International and Heritage own funeral establishments and are actual competitors in the provision of funerals. Heritage is the largest firm, and Loewen Group International is the only other firm providing funerals in the Castlewood area.

VI. EFFECT OF THE ACQUISITION 13. The effect of the acquisition may be substantially to lessen competition in the relevant market in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. 45, in the following ways, among others: a. By eliminating actual competition between Loewen Group International and Heritage; and b. By creating a monopoly in the relevant market. THE LOEWEN GROUP INC., ET AL. 25 22 Decision and Order VII. VIOLATION CHARGED 14. The agreement described above in paragraph seven constitutes a violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45, and the acquisition described above, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 ofthe FTC Act, i!_S amended, 15 u.s.c. 45.

Chairman Pitofsky recused.

DECISION AND ORDER The Federal Trade Commission ("Commission") having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents . having been furnished thereafter with a copy of a draft of complaint which the Dallas Regional Office proposed to ·present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of Section 5 of the Federal Trade Commission Act, as amended, and Section 7 of the Clayton Act, as amended; and The respondents, their attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, or that the facts as all~ged in such complaint, other than jurisdictional facts, are true and waivers and other provisions as required by the· Commission's Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents ·have violated said Acts, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribe~ in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order: -. Decision and Order 122 F.T.C. 1. Respondent The Loewen Gro11p 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 ofbusiness located at 4126 Norland Avenue, Burnaby, British Columbia, Canada V5G 3S8.

2. 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 lo~ated at 50 East River Center Boulevard, Covington, Kentucky. Proposed respondent Loewen Group International, Inc. is a wholly-owned subsidiary of The Loewen Group Inc. 3. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

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, I and the respective directors, officers, employees, agents, I 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 commemorativeI ceremony of the life of the deceased at which·ceremony the body is I present; this group of services ordinarily includes, but is not limited to: the removal of the body from the place of death; its embalming i].I or other preparation; making available a place for visitation and 'I viewing, for the conduct of a funeral service, and for the display of :I caskets and outside cases; and the arrangement for and conveyance!I of the body to a cemetery or crematory for final disposition.II i C. "Funeral establishment" means any facility that" provides funerals.

D. "Property to be divested" means all of the assets, properties, business and goodwill, tangible and intangible, utilized by the THE LOEWEN GROUP INC., ET AL. 27 22 · Decision and Order Castlewood Funeral Home located on Highway 58 in Castlewood, Virginia, 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 fun~ral establishment, provided that the trade name "Heritage" need not be divested;

4. All right, title and interest in the books, records and files pertinent to the property 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 nine (9) months after Loewen acquires the property to be divested, Loewen shall divest, absolutely and in good faith, the property to be divested. The property to be divested is 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 divestiture required by this order is to ensure the continued use of the property to be divested as an ongoing viable enterprise providing funerals and to remedy the l~ssening of competition alleged in the Commission's complaint. B. Pending divestiture of the _property to be divested, Loewen shall maintain the viability and marketability of the property to be divested and shall not.cause or permit the destruction, removal, or ·impairment of any assets or business of the property to be divested, except in the ordinary course of business and except for ordinary wear and tear.

Decision and Order 122 F.T.C. C. Loewen shall comply with the Agreement to Hold Separate, attached hereto and made a part hereof as Appendix I. Said agreement shall continue in effect until Loewen has divested the property to be divested or until such other time as the Agreement to Hold Separate provides.

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 property to be divested as required by paragraph II of this order within nine (9) months after Loewen has acquired the property to be divested, the Commission may appoint a trustee to divest the property to be .d.ivested. 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. 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.

THE LOEWEN GROUP INC., ET AL. 29 22 Decision and Order 2. Subject to the prior approval of the Commission, the trustee shall have the exclusive power and authority to divest the property to be divested.

3. The trustee shall have the power-and authority to abrogate any contract or agreement between Loewen and any i{ldividual which restricts, limits or otherwise impairs the ability of such individual to purchase the property to be divested or to become a director, officer, employee, agent or representative of any acquirer of the property to be divested.

4. Within ten (1 0) 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 divestiture 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 divestiture, 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 property 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 divestiture. Any delays in divestiture caused by Loewen shall extend the time 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 Cl:absolute and unconditional obligation to divest at no minimum price. The divestiture 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 Decision and Order 122 F.T.C. 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 tetins 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 divestiture 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 property 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 Ill. 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 divestiture required by this order. 12. The trustee shall have no obligation or authority to operate or maintain the property to.be divested.

THE LOEWEN GROUP INC., ET AL. 31 22 Decision and Order 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 (1 0) 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 Russell County, Virginia or within fifteen (15) miles of the Russell County, Virginia 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 Russell County, Virginia or within fifteen (15) miles of the Russell County, Virginia line.

Said notification shall be given on the Notification and Report Form set forth in the Appendix to Part 803 ofTitle 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. Decision and Order 122 F.T.C. 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 7 A of the Clayton Act, 15 U.S.C. 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 c.9mplying, and has complied with paragraphs II and ill of this order. Loewen shall include in its compliance reports, among other things that are required from time to time, a full descnption 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 divestiture 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 co1_1ceming divestiture. B. One (1) year from the date this order becomes final, annually for the next nine (9) yeats on the anniversary of the date this order becomes final, and at other times as the Cominission 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 foreclo.sure, made by Loewen during the twelve (12) months preceding the date of the report.

THE LOEWEN GROUP INC., ET AL. 33 22 Decision and Order VI.

It is further ordered, That, for a period of ten (1 0) years from the date this order becomes final, Loewen shall notify the Commission at least thirty (30) days prior to any prop,osed_ 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 vyith 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. · Chairman Pitofsky recused.

APPENDIX I AGREEMENT TO HOLD SEPARATE This Agreement to Hold Separate (the "Agreement") is by and between The Loewen Group Inc. ("Loewen Group"), a corporation organized and existing under 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; Loewen Group International, Inc. ("Loewen Group International")~ a wholly-owned subsidiary of Loewen Group, which is a corporation organized and existing under the laws of the State of Decision and Order 122 F.T.C. Delaware, with its office and principal place of business located at 50 East River Center Boulevard, Covington, Kentucky; and the Federal Trade Commission (the "Commission"), an independent agency of the United States Government, established under the Federal Trade Commission Act of 1914, as amended, 15. U.S.C. 41, et seq. (collectively, the "Parties").

PREMISES Whereas, on or about January 26, 1993, Loewen Group through its wholly-owned subsidiary Loewen Group International entered into an Agreement with Heritage Family Funeral Services, Inc. ("Heritage"), in which Loewen Group International agreed to acquire Heritage (the "Acquisition"); and Whereas, both Heritage and Loewen Group International own funeral establishments that provide funerals to consumers; and Whereas, the Commission is now investigating the Acquisition to determine if the Acquisition would violate any of the statutes enforced by the Commission; and Whereas, if the Commission accepts the Agreement Containing Consent Order (the "Loewen/Heritage Consent Agreement"), the Commission must place the Loewen/Heritage Consent Agreement on the public record for public comment for a period of at least sixty ( 60) days and may subsequently withdraw such acceptance pursuant to the provisions of Section 2.34 of the Commission's Rules; and Whereas, the Commission is concerned that if an understanding is not reached preserving the status quo ante and holding separate the assets and business of the property to be divested pursuant to paragraph II . (hereinafter "Hold Separate Assets") of the Loewen/Heritage Consent Agreement and the order, once it is final - ("Consent Order") until the divestiture contemplated by the Consent Order has been made, divestiture resulting from any proceeding challenging the legality of the Acquisition might not be possible or might be less than an effective remedy; and Whereas, the purposes of this Agreement, the Loewen/Heritage Consent Agreement, and the Consent Order are to: (1) Preserve the Hpld Separate Assets as a viable independent busjness pending the divestiture described in the Loewen/Heritage Consent Agreement and Consent Order;

I THE LOEWEN GROUP INC., ET AL. 35 22 Decision and Order (2) Preserve the Commission's ability to require the divestiture of the funeral establishment required by the Consent Order; and (3) Remedy any anticompetitive aspects of the Acquisition; and Whereas, Loewen Group's and Loewen Group International's entering ~nto this Agreement shall in no way be construed as an admission by Loewen Group and Loewen Group International that the Acquisition is illegal; and Whereas, Loewen Group and Loewen Group International understand that no act or transaction contemplated by this Agreement shall be deemed immune or exempt from the provisions of the antitrust laws or the Federal Trade Commission Act by reason of anything contained in this Agreement.

Now, therefore, the Parties agree, upon the understanding that the Commission has not yet determined whether the Acquisition will be challenged, and in consideration of the Commission's agreement that, at the time it accepts the Consent Order for public comment, it will grant early termination of the Hart-Scott-Rodino waiting period, as follows:

1. Loewen Group and Loewen Group International agree to execute and be bound by the attached Loewen!Heritage Consent Agreement.

2. Loewen Group and Loewen Group International shall hold the Hold Separate Assets separate and apart from the date this Agreement is accepted until the first to occur of:

a. Three (3) business days after the Commission withdraws its acceptance of the Loewen!Heritage Consent Agreement pursuant to the provisions of Section 2.34 of the Commission's Rules; or b. The day after the divestiture required by the consent order is accomplished.

3. Loewen Group's and Loewen Group International's obligation to hold the Hold Separate Assets separate and apart shall be on the following terms and conditions:

a. The Hold Separate Assets, as they are presently constituted, shall be held separate and apart and shall be operated independently of Loewen Group and Loeweq. Group International except to the Decision and Order 122 F.T.C. extent that Loewen Group and Loewen Group International must exercise direction and control over the Hold Separate Assets to assure compliance with this Agreement, the Loewen/Heritage Consent Agreement, or the Consent Order.

b. Except as provided herein and as is necessary to assure compliance with this Agreement, the Loewen/Heritage Consent Agreement, and the Consent Order,- Loewen Group and Loewen Group International shall not exercise direction or control over, or influence directly or indi~ectly, the Hold Separate Assets or any of their operations or business.

c. Loewen Group and Loewen Group International shall cause the Hold Separate Assets to continue using their present name and trade name, and shall maintain and preserve the viability and marketability · of the Hold Separate_Assets and shall not sell, transfer, encumber (other than in the normal course of business), or otherwise impair their marketability or viability.

d. Loewen Group and Loewen Group International shall refrain from taking any actions that may cause any material adverse change in the business or fmancial conditions of the Hold Separate Assets. e. Loewen Group and Loewen Group International shall not change the composition of the management of the Hold Separate Assets, except that Loewen Group and Loewen Group International shall have the power to fill vacancies and remove management for cause.

f. Loewen Group and Loewen Group International shall maintain separate financial and operating records and shall prepare separate quarterly and annual financial statements for the Hold Separate Assets and shall provide the Commission with such statements for the funeral establishment within ten days of their availability. g. Except as required by law, and except to the e~tent that necessary information is exchanged in the course of evaluating the Acquisition, defending investigations or litigation, or negotiating agreements to dispose of assets, Loewen Group and Loewen Group International shall not receive or have access to, or the use of, any of the Hold Separate Assets' "material confidential information" not in the public domain, except as such information would be available to Loewen Group and Loewen Group International in the normal course of business if the Acquisition had not taken place. Any such information that is obtained pursuant to this subparagraph shall only be used for the purpose set out in this subparagraph. ("Material . . THE LOEWEN GROUP INC., ET AL. 37 22 Decision and Order confidential information," as used herein, means competitively sensitive or proprietary information not independently known to Loewen Group and Loewen Group International from sources other than Heritage, and includes but is not limited to pre-need customer lists, prices quoted by suppliers, ·or trade secrets.) h. All earnings and profits of the Hold Separate ·Assets shall be held separately. If necessary, Loewen Group -and Loewen Group International shall provide the Hold Separate Assets with sufficient working capital to operate at their current rate of operation. i. Loewen Group and Loewen Group International shall refrain from, directly or indirectly, encumbering, selling, disposing of, or causing to be transferred any assets, property, or business of the Hold Separate Assets, except that the Hold Separate Assets may advertise, purchase merchandise and sell or otherwise dispose of merchandise in the ordinary course ofbusiness.

4. Should the Federal Trade Commission seek in any proceeding to compel Loewen Group and Loewen Group International to divest themselves of the shares ofHeritage stock that they may acquire, or to compel Loewen Group and Loewen Group International to divest any assets or businesses of Heritage that they may hold, or to seek . any other injunctive or equitable· relief, Loewen Group and· Loewen Group International shall not raise any objection based upon the expiration of the applicable Hart-Scott-Rodino Antitrust Improvements Act waiting period or the fact that the Commission has permitted the Acquisition. Loewen Group and Loewen Group International also waive all rights to contest the validity of this Agreement.

5. For the purpose of determining or securing compliance with this Agreement, subject to any legally recognized privilege, and upon written request with reasonable notice to Loewen Group and Loewen Group International made to their principal offices, Loewen Group and Loewen Group International shall make available to any dulyauthorized representative or represe.ntatives of the Commission: a. All books, ledgers, accounts, correspondence, memoranda, and other records and documents in the possession or under the control of Loewen Group and Loewen Group International, for inspection and copying during office hours and in the presence of counsel; and 3 8 FEDERAL TRADE COMMISSION DECISIONS Decision and Order 122 F.T.C. b. Upon five (5) days' notice to Loewen Group and Loewen Group International and without restraint or interference from Loewen Group or Loewen Group International, officers or employees of Loewen Group and Loewen Group International, who may have counsel present, for interviews regarding any such matters. 6. This agreement shall not be binding until approved by the Commission. - RUSTEV ADER CORPORATION, ET AL. 39 39 . Complaint