The U.S. Federal Trade Commission has filed a complaint against three dental supply companies—Henry Schein Inc, Melville, NY; Benco Dental Supply Co, Pittston, Pa; and Patterson Companies Inc, St. Paul, Minn—alleging that they violated U.S. antitrust laws by conspiring to refuse to provide discounts to or otherwise serve buying groups representing dental practitioners. According to the Commission, these buying groups sought lower prices for dental supplies and equipment on behalf of solo and small-group dental practices seeking to gain discounts by aggregating and leveraging their collective purchasing power and bargaining skills of the individual practices.
The complaint also alleges an FTC Act Section 5 violation against Benco for inviting a fourth competing distributor, Burkhart Dental Supply, Tacoma, Wash, to join the conspiracy.
The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. A complaint constitutes an allegation, but does not constitute a determination that the law has been violated as alleged.
The Commission contends that the alleged agreement among Benco, Henry Schein, and Patterson deprived independent dentists of the benefits of participating in buying groups that purchase dental supplies from national, full-service distributors. Benco and Henry Schein allegedly entered into an agreement refusing to provide discounts to or compete for the business of buying groups. The complaint details communications between executives of the two companies evidencing the agreement, as well as attempts to monitor and ensure compliance with the agreement. The complaint also asserts that Patterson joined the agreement. The complaint charges Benco, Henry Schein, and Patterson of conspiring in violation of Section 5 of the FTC Act.
Based on the agreement among the distributors, the complaint contends that Benco, Henry Schein and Patterson unreasonably restrained price competition for dental products in the United States; distorted prices and undermined the ability of independent dentists to obtain lower prices and discounts for dental products; deprived independent dentists of the benefits of vigorous price and service competition among full-service, national dental distributors; unreasonably reduced output of dental products to dental buying groups; and eliminated or reduced the competitive bidding process for sales to these buying groups.
The Commission vote to issue the administrative complaint was 2 to 0. The administrative trial is scheduled to begin on October 16, 2018.
Henry Schein Inc, Melville, NY, released the following statement in response to allegations made by the Commission against the company:
“Based on the FTC’s press release, the Company is being accused of participating in a conspiracy to refuse to provide discounts to, or compete for, the business of buying groups. Contrary to the FTC’s allegations, the Company was a leader in supplying buying groups, has consistently done business with buying groups, has a dedicated team to serve buying groups, and never entered into an agreement with others to refuse to do business with buying groups. Based on the FTC’s original definition of buying groups, the Company does business with more than 100 buying groups. Even under a narrower definition recently advanced by the FTC, the Company has done business, and continues to do business, with the very groups it is now accused of boycotting. The Company believes that the allegations as described in the press release are meritless and intends to defend itself vigorously. The Company does not anticipate that this matter will have a material adverse effect on our financial condition or results of operations.”