FTC hands out mixed ruling to Benco, Patterson, Schein

2016 09 01 13 52 16 412 Gavel 400

Henry Schein was cleared of conspiracy charges in an October 16 ruling by the U.S. Federal Trade Commission (FTC). However, fellow defendants Patterson Companies and Benco were found to have conspired to refuse to offer discounted prices or otherwise compete for the business of buying groups of independent dentists.

The ruling by D. Michael Chappell, the FTC's chief administrative law judge, comes after the FTC alleged that Henry Schein, Patterson, and Benco Dental violated U.S. antitrust laws by conspiring to refuse to provide discounts to, or otherwise serve, buying groups representing dental practitioners.

"Complaint Counsel [the FTC] has met its burden of proving that Benco and Patterson conspired to refuse to discount to or otherwise compete for the business of buying groups," Chappell wrote in his decision. "Complaint Counsel has failed to meet its burden of proving a conspiracy involving Schein."

Buying groups

The administrative trial began in October 2018 and continued until February 2019. Chappell considered the testimony of a total of 65 witnesses, presented live or by deposition, and more than 5,000 exhibits admitted into evidence.

The FTC presented 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 documents introduced in the trial, Henry Schein and Benco made an initial agreement no later than July 2012, with Patterson joining no later than February 2013.

These documents 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.

The judge ordered that Benco and Patterson must set up and maintain an antitrust compliance program, as well as cease and desist from and are prohibited from doing the following:

Preventing or discouraging any Dental Practice Customer from joining or endorsing a Buying Group, including by refusing to provide certain Dental Products or Dental Services to a Dental Practice Customer, or withholding financial incentives, including discounts or rebates, to a Dental Practice Customer because of such Dental Practice Customer's participation in or affiliation with a Buying Group

Mixed reactions

In a statement, Stanley Bergman, chairman of the board and CEO of Henry Schein, stated that he was pleased with the ruling.

"We have publicly denied these allegations from the very start of this matter," Bergman stated. "Henry Schein has always been committed to doing business in an ethical manner wherever we operate, and our team looks forward to continuing to serve our customers and suppliers with the excellence that is expected from us."

Patterson Companies stated in a press release that it would consider all legal options.

"We strongly disagree with any finding against Patterson and believe the facts demonstrate the company's independent decision-making in a highly competitive industry. We are evaluating all of our legal options, including appealing to the full Commission to review the facts of the matter," Patterson stated.

At press time, Benco Dental had not released a statement.

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