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Dental companies reach agreement in antitrust suit

September 07, 2018

By Jennifer Garvin

Three dental companies have reached a tentative agreement to pay $80 million as part of a class action lawsuit alleging they violated federal antitrust laws by fixing prices on dental equipment and supplies.

The dental companies, Benco Dental, Henry Schein Inc. and Patterson Companies Inc., are alleged to have conspired to suppress price competition so that "they each could charge artificially inflated prices for dental supplies and equipment," according to the lawsuit, which was filed in March 2016 in the Eastern District of New York. The plaintiffs filed on behalf of some 142,000 U.S. dental offices and laboratories.

According to Eric Cramer, an attorney with Berger Montague, one of the firms leading the class action litigation, the entire settlement is expected to total $80 million. Henry Schein said Aug. 30 that it expects to pay approximately $38.5 million to settle the class action lawsuit. In a press release announcing first-quarter results to investors, Patterson said it has established a pre-tax reserve of $28.3 million to pay for the settlement. Benco — a privately-held company — did not announce its expected payment. 

"We categorically and emphatically deny any wrongdoing, and we have made a business decision in the best interests of the company to engage in settlement discussions to avoid long, distracting litigation and the additional use of resources," said Stanley M. Bergman, chief executive officer, Henry Schein, in a news release. "We have a long history of serving customers with integrity and honesty, and we have earned our reputation for doing business ethically in a competitive business environment."

"The lawsuit ran contrary to our nine-decade history of bringing choice and innovation to dentists across the United States. In agreeing to the settlement, we're able to dedicate all efforts to our customer-focused mission," said Chuck Cohen, managing director, Benco Dental, in a press statement.

The class action suit is not the first legal action alleging Benco Dental, Henry Schein Inc. and Patterson Companies Inc. violated antitrust laws.

In February, the Federal Trade Commission filed a complaint against the three companies, alleging that they "deprived independent dentists of the benefits of participating in buying groups that purchase dental supplies from national, full-service distributors." The complaint also estimated that "collectively, the big three are alleged to control more than 85 percent of all distributor sales of dental products and services nationwide, a total market estimated at approximately $10 billion." The complaint also alleged that Benco invited Burkhart Dental Supply to "refuse to provide discounts to buying groups" and separately charged Benco with a Section 5 invitation to collude. The trial is scheduled to begin Oct. 16.

There also have been multiple shareholder class action lawsuits filed against Henry Schein and Patterson Inc. on behalf of purchasers of the company's securities following news of the FTC complaint.

Once the class action settlement is final, customers whose names and addresses are included in the defendants' databases will be notified of the next steps. The class attorneys will also contact organizations such as the ADA so it can provide information, and the law firms will also set up a website to explain the terms of the settlement and process for making a claim.
 
The ADA will provide updates as this story unfolds.