The antitrust complaint against Minnesota dental-products distributor Patterson Cos. and its two largest competitors is out this morning, with details about executives’ efforts to stonewall buying groups working on behalf of smaller dental offices.
The Federal Trade Commission sued Patterson, Henry Schein Inc. of New York and Benco Dental Supply Co. of Pennsylvania this week, alleging that the three players illegally teamed up to tamp down competition in the $10 billion U.S. market for dental products. The three companies are said to control 85 percent of the market.
According to the complaint, which was filed under seal Monday and then published with numerous redactions Thursday, the national dental suppliers saw how group purchasing organizations representing hospitals were able to drive down suppliers’ margins in the separate industry for medical products.
Unlike with medical supplies, the dental industry is not yet dominated by group-purchasing organizations. The FTC says dental suppliers agreed amongst themselves to boycott buying groups working for smaller dental offices, out of a fear that offering bulk discounts would drive down the distributor’s profits.
The FTC complaint includes examples of executives at the three companies agreeing to boycott buying groups and then policing their agreements later, when suspicions arose that some were secretly working with the groups.
The three companies defended their practices this week. Patterson called the claims meritless, while Schein said it actually did do business with buying groups, despite allegations to the contrary.