FTC provides new details in case against distributors

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On February 15, the U.S. Federal Trade Commission (FTC) released new details about its antitrust complaint against dentistry's three largest distributors. It also suggested nine actions it believes the companies should be required to take if they are found guilty of conspiracy.

The new document comes after the FTC alleged that Henry Schein, Patterson Companies, and Benco Dental violated U.S. antitrust laws by conspiring to refuse to provide discounts to, or otherwise serve, buying groups representing dental practitioners. The companies are currently charged with conspiracy and an administrative trial has been set for later this year.

Should the administrative judge rule that the three companies violated antitrust laws, the commission has recommended nine suggested actions, including the following:

  • Establishing an antitrust compliance program
  • Requiring documentation for communications with competitors
  • Requiring payment to the FTC for monitoring compliance
  • Submitting periodic reports that detail their compliance

New evidence

The document also included new evidence that Henry Schein, Patterson, and Benco allegedly agreed not to provide discounts to, or otherwise serve, buying groups of independent dentists. According to the redacted document, Henry Schein and Benco made an initial agreement no later than July 2012, with Patterson joining no later than February 2013.

The document alleged that high-level executives at all three companies were in communication about not selling to buying groups, and they discussed on at least one instance whether a company was a buying group of independent dentists or a corporate dental practice.

"I just sent a note about it," one person, whose name was redacted, allegedly said to a Benco regional manager about not selling to buying groups. "Don't want to call because it might be construed as price fixing."

Employees of the companies also repeatedly communicated with each other before pulling out of the 2014 Arizona Dental Association (AZDA) and Texas Dental Association (TDA) annual trade shows. Both AZDA and TDA were creating statewide buying groups that year.

Benco and Henry Schein ended up settling with the Texas attorney general in 2015 and 2017, respectively. The Texas attorney general claimed that the companies violated state antitrust law by working with competitors to prevent TDA from distributing lower-cost dental supplies online.

"The Distributors' interfirm communications and subsequent withdrawal from the TDA and AZDA trade shows are evidence of their conscious commitment to coordinate their response to the threat of buying groups," the FTC document states.

Company responses

Benco, Henry Schein, and Patterson did not comment when asked about the latest FTC allegations. However, all three companies issued immediate denials earlier this week.

Henry Schein previously stated that it has consistently done business with buying groups and has a team dedicated to serving them. Benco said the allegations are contrary to the company's beliefs and actions. And Patterson stated that the allegations are meritless.

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

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