FTC judge rules on conspiracy allegations involving Henry Schein, Benco, Patterson
October 17, 2019
— The U.S. Federal Trade Commission dismissed claims Oct. 15 that Henry Schein conspired with competitors to avoid providing discounts to, or to otherwise serve, buying groups representing dental practitioners.
D. Michael Chappell, FTC chief administrative law judge, held that the other respondents, Benco Dental Supply Co. and Patterson Cos., were part of the conspiracy, but Henry Schein was not.
The dismissal is unrelated to and separate from a federal court-approved $80 million settlement agreement in a class action lawsuit against dental product companies Henry Schein, Patterson and Benco, who were accused of violating antitrust laws by fixing prices on dental equipment and supplies. For more information on the case specifics, visit ADA.org
and search for ADA News stories containing the words “$80 million settlement.”
The FTC has demonstrated, it said in the Oct. 15 ruling, “that respondents Benco and Patterson conspired to refuse to offer discounted prices or otherwise compete for the business of buying groups and that such an agreement is a per se violation of Section 5 of the FTC Act.”
of the FTC Act prohibits “unfair or deceptive acts or practices in or affecting commerce.”
Stanley M. Bergman, Henry Schein board chair and CEO, applauded the ruling in a statement
issued by the company.
“We have publicly denied these allegations from the very start of this matter,” said Mr. Bergman. “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 also commented
on the FTC judge’s findings.
“We strongly disagree with any finding against Patterson and believe the facts demonstrate the company’s independent decision-making in a highly competitive industry” said a spokesperson in a Patterson news release. “We are evaluating all of our legal options, including appealing to the full commission to review the facts of the matter. Patterson takes compliance very seriously and maintains the highest levels of integrity and ethical standards while partnering with all types of customers to support their businesses and provide outstanding care to their patients.”
A Benco spokesperson said in an email, “We have worked hard, and independently, for more than 80 years to provide competitive supply costs to dentists and their patients. We have always believed that the FTC claims against Benco were without merit. After a trial where Benco was able to defend itself, we are pleased that the administrative law judge dismissed the majority of the claims against Benco. As to the lone remaining claim, we look forward to continuing in the appellate process to show that neither the facts nor the law support the FTC claim against Benco. Throughout this process, we have remained focused on driving dentistry forward through innovative solutions and our caring family culture. That focus will never change.”
Judge Chappell dismissed another violation in the FTC’s complaint, which alleged that Benco invited a fourth competing distributor to join the conspiracy.
The FTC’s February 2018 administrative complaint
involved the nation’s three largest dental supply companies: Benco, Henry Schein and Patterson, who the court said, control more than 85 percent of all distributor sales of dental products and services nationwide.
According to the FTC’s original complaint, the three companies deprived solo and small-group dental practices of the benefits of participating in buying groups that purchase dental supplies from national full-service distributors. The complaint alleged that the three companies thus violated U.S. antitrust laws, according to a news release
issued by the FTC, which includes a link to the decision text
A buying group is an organization made up of small businesses that band together so they can negotiate as a larger group with vendors to receive better pricing and terms on goods and services.
The judge’s initial decision is subject to review by the full FTC on its own motion, or at the request of any party. The initial decision will become the decision of the commission 30 days after it is served upon the parties, unless a party files a timely notice of appeal — and thereafter files a timely appeal brief — or the commission places the case on its own docket for review or stays the effective date of the decision.