Patterson Cos. Among Dental Product Distributors Accused of Violating FTC Antitrust Laws
The Federal Trade Commission has accused the nation’s three largest dental supply companies of breaking an antitrust law.
In a complaint filed Tuesday, the FTC alleged that Mendota Heights-based Patterson Companies, along with Henry Schein Inc. and Benco Dental Supply, conspired to refuse to provide standard discounts and other related services to buying groups representing solo and small-business dental practices.
The FTC suspected the three companies violated Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce,” or “unfair methods of competition,” the government agency said in its release.
Patterson, Henry Schein and Benco collectively control more than 85 percent of all distributor sales of dental products and services in the U.S. — a market valued at approximately $10 billion, the FTC said. The products the companies sell include gloves, cements, sterilization products, dental chairs, lights and more.
Buying groups, such as the ones the FTC said Patterson, Henry Schien and Benco conspired against, aggregate and leverage the collective purchasing power and bargaining skills of the small practices they represent as a way to drive down costs of dental supplies and equipment. The resulting discounts greatly benefit each practice, the FTC said.
However, the purported conspiracy that was made allegedly restrained price competition, distorted prices, limited opportunities for discounts and reduced the distribution of products to buying groups, according to the complaint. In all, the three supply companies essentially eliminated the powers of the buying groups, the FTC claimed.
Benco and Henry Schein allegedly made the agreement, the FTC said, and then Patterson joined in. The complaint cited communications between company executives as proof. It also charged Benco with an additional Section 5 invitation to collude count, alleging the company tried multiple times to bring Burkhart Dental Supply — the fourth largest full-service distributer in the industry — into the fold.
Patterson outright denied the allegations in a statement, calling them “meritless.” The company said it “maintains the highest levels of integrity and ethical standards and has a 140 year history of partnering with all types of customers to grow their businesses and provide outstanding care to their clients.”
Patterson, which makes and sells animal health as well as dental products, became one of Minnesota’s 18 Fortune 500 companies when it debuted on the list for the first time last year.
The company stated that it intends to “vigorously defend itself” against the FTC’s complaint.
An FTC spokesperson told TCB that, per standard procedure in matters of federal antitrust law violations that are bound for litigation, the initial complaint would not be made public, but a public version would be released soon.
The administrative trial is scheduled to begin on October 16 of this year.