U.S. District Judge Brian M. Cogan ruled on September 28 that a class-action lawsuit filed in March against Henry Schein, Patterson Companies, and Benco Dental can proceed.
"Plaintiffs have sufficiently alleged that defendants orchestrated a single interconnected nationwide conspiracy not to compete on price with the common goal of driving up margins and preventing competitive upstarts from gaining a larger share of the market," Cogan wrote in his decision.
Charges of antitrust and price fixing
According to a press release issued earlier this year by the co-lead attorneys from the law firm Hausfeld, the suit filed in the U.S. District Court for the Eastern District of New York alleges that the defendants "have threatened to boycott and actually boycotted manufacturers, state dental associations, and dental practices that did business with or considered doing business with the defendants' lower-priced and higher-quality rivals."
“Plaintiffs have sufficiently alleged that defendants orchestrated a single interconnected nationwide conspiracy not to compete on price.”
— U.S. District Court Judge Brian M. Cogan
The March 11 lawsuit combined 33 separate lawsuits that were filed in January and February 2016. In it, the defendants are accused of "illegally engaging in a conspiracy to boycott competitor dental product distributors and other entities that do business with such competitors, in order to allow Defendants to maintain and extend their dominant collective market power in the market for the distribution of dental supplies and dental equipment (collectively, 'dental supplies') in the United States."
A Henry Schein regional manager is quoted in the lawsuit as saying that the goal of the alleged collaboration was to ensure that dentists get dental products for "the same price no matter who they buy it from" so that "we all get paid," and the scope of the margin-fixing scheme ran "unanimously across the industry [for] as long as [he's] been in the dental business."
The companies are also accused of blocking the entry and expansion of "lower-margin, lower-priced, rival dental distributors into the market" by engaging in a "concerted and collusive effort that involved threats to boycott collectively, and actual group boycotts of, dental supply and equipment manufacturers, state dental trade associations, dental practices, and other industry participants that chose to deal with or sell to lower-priced dental distributors."
The plaintiffs claim this alleged collaboration began in or before 2008 and that companies such as Amazon.com and SourceOne Dental have been "[v]ictims of the conspiracy."
The companies are also accused of agreeing to respect each company's customer base and to try not to hire sales representatives from the involved companies.
In looking at all the evidence presented, Cogan wrote that the motion to dismiss would be denied.
"I have considered all of the other arguments raised by defendants as to the allegations against them individually, and find that although some are strong and some are weak, the complaint in its totality states a claim as to each defendant," Cogan wrote.
Jury trial requested
About 142,000 unique dental and orthodontic practices and dental laboratories are being represented, according to the lawsuit. The plaintiffs are seeking treble damages and injunctive relief under the Sherman Antitrust Act. They are also asking for a jury trial.
One of the defendants, Benco Dental, offered a response through a media spokesperson on the decision to allow the case to proceed.
"We are disappointed with the court's decision not to dismiss the case at this time. However, this was merely a preliminary ruling and we remain confident that Benco will prevail in this case, since at no time has our company been a participant in any anticompetitive actions to block or otherwise impair the ability of other distributors to compete in the dental supplies market."
Through a spokesperson, Henry Schein responded that the company would defend itself.
"Specific to the allegations, we intend to defend ourselves vigorously against this action. We built our business by putting the interests of our customers first. Our mission is to be the trusted advisor to our customers, and we are dedicated to providing the best quality and value in products and services so customers can focus on providing the best quality patient care. That is the hallmark of Henry Schein."
Eric Cramer, JD, of Berger & Montague, one of the firms representing the plaintiffs, said his firm was pleased at the decision to proceed.
"We are pleased that the court has allowed the case to proceed and look forward to vindicating the rights and interests of the thousands of dentists and dental labs in our proposed class at trial," he said.
At press time, Patterson Companies had not yet responded to a request for comment.
Features Editor Donna Domino and Assistant Editor Theresa Pablos contributed to the reporting of this article.
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