Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Dental supplies distributors allegedly conspired to block competition through group boycotts, (Feb 26, 2016)

By Linda O’Brien, J.D., LL.M.

Three leading distributors of dental supplies conspired to monopolize the dental supplies market by engaging in or threatening group boycotts in order to block or impair the ability of rivals to compete in that market, according to a class action complaint filed in the federal district court in Brooklyn, New York (White v. Benco Dental Supply Co., February 25, 2016).

Benco Dental Supply Company, Patterson Companies, and Henry Schein, Inc. are the three principal distributors of dental supplies and equipment in the United States. Sander White operates a dental practice in Broomall, Pennsylvania.

White’s complaint states that dental supplies distributors carry a full range of supplies, offering dental practitioners the ability to “one stop shop,” a convenience for which the distributors have traditionally charged a premium. There have been distributors that were willing to forego charging premiums. One way a new distributor can expand its sales into the dental supplies market is to partner with a state dental association and many state dental associations have been actively interested in sponsoring or partnering with new distributors as a benefit to their members.

After new distributor SourceOne Dental created an online dental supplies distribution platform in 2013 that offered dental supplies at lower prices, the defendant distributors reach an agreement to stop the success of the new competitor by threatening to boycott the state dental association’s annual meeting and cease doing business with manufacturers and entities that dealt with SourceOne. The defendants also contacted other distributors and manufacturers and pressured those entities to cease supplying the new lower-priced competitors with dental supplies, the complaint alleges.

The complaint also states that, because the defendants hold a dominant share of the dental supplies market, many manufacturers that rely on the defendants for a substantial portion of their total revenues and were successfully dissuaded from doing business with the new competitors. The defendants also pressured state dental associations to refrain from doing business with their competitors and boycotted associations that endorsed or partnered with those competitors.

According to White’s complaint, the market for the distribution of dental supplies is highly concentrated and there are no reasonably available substitutes for distributors of dental supplies. Patterson Companies, Henry Schein, and Benco Dental Supply together allegedly account for over 80 percent of the all sales in the market. The anticompetitive conduct maintained and increased the defendants’ collective market power and enabled them to maintain supra-competitive prices.

The plaintiff claims for horizontal price fixing and group boycott in violation of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:16-cv-00945.

Attorneys: John Radice (Radice Law Firm) and David H. Weinstein and Robert S. Kitchenoff (Weinstein Kitchenoff & Asher LLC) for Sander I. White.

Companies: Patterson Companies, Inc.; Henry Schein, Inc.; Benco Dental Supply Company

News: Antitrust NewYorkNews