FTC ruling reverberates through dental distributor segment

2019 10 17 17 05 3174 Gavel Legal Business 400

Benco Dental plans to appeal the U.S. Federal Trade Commission (FTC) finding that the dental product distributor and Patterson Companies conspired to undermine dental buying groups, which negotiate lower prices for smaller dental practices.

The third defendant, Henry Schein, was cleared. The FTC's chief administrative law judge found that Henry Schein didn't conspire to refuse to offer discounts or compete for the business of buying groups, according to the ruling announced on October 16.

A Benco spokesperson said the company has always believed the claims against it had no merit, and "we look forward to continuing in the appellate process to show that neither the facts nor the law support the FTC claim against Benco."

Patterson has already stated that it was evaluating its legal options, including appealing for the full FTC to review the facts of the case. Benco and Patterson must file appeals before the FTC's ruling becomes final in 30 days.

The Benco spokesperson added that the company has worked hard for some 80 years to provide competitive supply costs to dentists and their patients, and it promises to remain focused on driving dentistry forward through innovative solutions and its caring family culture.

"That focus will never change," the Benco spokesperson said.

Ripple effects

The FTC alleged that the three companies violated U.S. antitrust laws by conspiring to refuse to provide discounts to, or otherwise serve, dental buying groups. Documents presented at trial alleged that high-level executives at the companies discussed this. Unless the ruling is appealed successfully, Benco and Patterson must create and maintain antitrust compliance programs.

In addition to the programs, the judge ordered that Benco and Patterson were prohibited from preventing or discouraging any dental practice customers from joining or endorsing a buying group. This includes refusing to provide certain dental products or services to customers.

Also, the judge barred the two companies from withholding financial incentives, including discounts or rebates, to customers who participate or are affiliated with a buying group.

The FTC ruling is creating ripple effects through the dental industry. One distributor that was not a party to the litigation, the Dentists Supply Company (TDSC), stated that it looks forward to continuing its partnerships with dental suppliers in the supply and equipment industry.

"In the wake of the judge's initial decision, members of organized dentistry across the country, particularly solo practitioners, can rest assured that the Dentists Supply Company has their best interests at heart -- for their practices and patients," Jim Wiggett, CEO of TDSC, said in a statement.

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