FTC files antitrust complaint against Big 3 distributors

2013 12 05 17 00 03 877 Ftc Logo 200

The U.S. Federal Trade Commission (FTC) has filed an antitrust complaint against the three largest dental products distributors in the U.S.

Henry Schein, Patterson Companies, and Benco Dental are alleged to have violated U.S. antitrust laws by conspiring to refuse to provide discounts to, or otherwise serve, buying groups representing dental practitioners, according to a February 12 FTC statement. These groups sought lower prices for supplies and equipment.

The commission cites communications between executives of Henry Schein and Benco about the alleged agreement. It noted that Patterson allegedly joined the agreement and that Benco invited a fourth distributor to participate.

The companies are charged with conspiracy with an administrative trial has been set for October 16. The three companies control 85% of all distributor sales of dental products and services in the U.S., according to the FTC.

Price competition

The FTC alleges that the companies "unreasonably restrained price competition for dental products" in the U.S. The commission also included several specific contentions:

  • The companies distorted prices.
  • The companies undermined the ability of independent dentists to obtain lower prices and discounts for dental products.
  • The companies deprived independent dentists of the benefits of vigorous price and service competition among full-service dental distributors.
  • The companies unreasonably reduced output of dental products to dental buying groups.
  • The companies eliminated or reduced the competitive bidding process for sales to these buying groups.

A complaint constitutes an allegation, but no determination that a law has been broken.

Vigorous defense

All three companies issued immediate denials.

“We expect to fully resolve this issue in a way that clarifies the integrity of our people and processes.”
— Benco Dental

Henry Schein said that it has consistently done business with these buying groups and even has a dedicated team to serve them.

"The company has done business, and continues to do business, with the very groups it is now accused of boycotting," Henry Schein stated in a press release.

Henry Schein promised a vigorous defense.

"The company believes that the allegations as described in the press release are meritless and intends to defend itself vigorously," Henry Schein noted.

The timing of the complaint was ironic for Henry Schein, which was named to the Ethisphere Institute's list of the world's most ethical companies on February 12.

In an email to DrBicuspid.com, a Benco Dental spokesperson stated the company expected the issue to be resolved.

"This complaint is completely contrary to our long-held belief in, and actions to create, an open and growing dental marketplace founded on greater choice, convenience, and improved value," the Benco spokesperson wrote. "We expect to fully resolve this issue in a way that clarifies the integrity of our people and processes."

Patterson also stated that the allegations are meritless.

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