Saturday, September 24

Henry Schein Cleared in FTC Case

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An administrative law judge has ruled that two of companies named in a Federal Trade Commission complaint violated U.S. antitrust laws, but gave Melville-based Henry Schein a clean bill of health.

Chief Administrative Law Judge D. Michael Chappell said that Benco Dental Supply Company and Patterson Companies conspired to refuse to provide discounts to, or otherwise serve, buying groups representing dental practitioners.

But the judge, in his initial ruling regarding the FTC’s February 2018 administrative complaint, said that Schein was not part of the conspiracy. Schein shares rose 61 cents on Oct. 16, or less than 1 percent.

“We have publicly denied these allegations from the very start of this matter,” Henry Schein CEO Stanley Bergman said in a written statement. “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.”

The case named the nation’s three largest dental supply companies, which offer gloves, cements, sterilization products and a range of other supplies, as well as equipment, such as dental chairs and lights.

The FTC said that together “the big three control more than 85 percent of all distributor sales of dental products and services nationwide” in a market valued at approximately $10 billion.

Judge Chappell said the FTC has demonstrated that “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.”

But he said the evidence fails to prove a conspiracy involving Schein, and dismissed the complaint against Schein, which employs about 19,000 worldwide and serves more than 1 million customers.

Judge Chappell also dismissed the FTC’s claim that Benco had invited a fourth competing distributor to join the conspiracy.

Buying groups let smaller practices and groups work together to bargain and get better negotiated prices.

The FTC’s complaint alleged that by not working with buying groups, large distributors “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 initial decision is subject to review by the full Federal Trade Commission on its own motion, or at the request of any party.

It becomes the Commission’s decision 30 days after it is served upon the parties, unless a party files a timely notice of appeal and an actual appeal or the Commission places the case on its own docket for review or stays the effective date of the decision.


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