Funeral industry buries competition

March 17, 2006|By JEFF ROWES

Anyone who's ever made arrangements for a deceased loved one knows that it's expensive. Charles Brown can tell you at least part of the reason why: Funeral industry insiders don't like competition and work hard to preserve an unfair Maryland law that keeps out entrepreneurs like him.

Mr. Brown owns a cemetery in Hagerstown and would like to own the funeral home he built there. But he can't realize his dream because he's not a licensed funeral director. Even though he would hire a funeral director to oversee funerals in his funeral home, Maryland law only trusts licensed funeral directors to own funeral homes.

Unless, of course, you've got $250,000 to burn.

In Maryland, you can open a funeral home without being a licensed funeral director if you can get your hands on one of 58 special licenses that allow corporations to own funeral homes. Because of their government-created scarcity, these licenses fetch such high prices and for the most part have been snatched up by big players.

Maryland's funeral home ownership law, which has created a cartel of licensed funeral directors and wealthy companies, clobbers the consumer by shutting down entrepreneurs such as Mr. Brown. There are drastically fewer funeral homes per capita in Maryland than in its neighbors, including Virginia, West Virginia, New Jersey, Delaware, New York and North Carolina.

This lack of competition drives up prices - way up. Experts recently estimated that Maryland's closed funeral market results in funerals costing about $800 more than they would in a more competitive environment.

Over the past decade, Mr. Brown has worn out more than one pair of shoes walking the halls of the state capital speaking to legislators about a common-sense reform that would allow entrepreneurs to open funeral homes on the same terms as the special corporate licensees.

Just about everyone agrees, including, believe it or not, the state of Maryland. In considering a 2004 reform bill, the Maryland Department of Health and Mental Hygiene, which oversees the funeral industry, concluded that the current law is bad for consumers and bad for the industry because it suppresses competition. This conclusion was echoed by the Federal Trade Commission, which, after looking at the same bill, stated that the law is a pointless restraint on trade.

So how does this wrongheaded law survive reform efforts year after year? The funeral home cartel has a special benefactor in the General Assembly: Democratic Del. Hattie N. Harrison of Baltimore, chairwoman of the House Rules Committee. Delegate Harrison, who has received thousands of dollars in campaign contributions from the funeral home industry, simply blocks any bill the funeral home cartel doesn't like.

Fed up with a ridiculous law that hammers consumers and keeps him from competing, Mr. Brown, along with four other plaintiffs, filed suit this month in U.S. District Court in Baltimore to open up the market.

As an African-American entrepreneur, one of the other plaintiffs in the case, Joe Jenkins, knows that Maryland's unfair funeral home ownership law is morally indistinguishable from the sort of Jim Crow laws that once excluded people like him from honest work. Our Constitution, our traditions and our history recognize that there is dignity in honest work and that unfair restrictions on the right to earn an honest living are an insult to that dignity.

Jeff Rowes is an attorney with the Institute for Justice in Arlington, Va. His e-mail is jrowes@ij.org.

Columnist Clarence Page will return Tuesday.

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