Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC Requires Pet Testing Products Company to Alter Distribution Practices, (Dec 28, 2012)

By Jeffrey May, J.D.

IDEXX Laboratories, Inc.—the largest U.S. supplier of diagnostic testing products used by small animal veterinarians—has agreed to settle FTC charges that it maintained a monopoly in the market for point-of-care (POC) diagnostic products used by veterinarians who treat companion animals. In its complaint, the FTC alleged that IDEXX’s use of exclusive contracts with its distributors blocked rivals from the most efficient sales channel (In the Matter of IDEXX Laboratories, Inc., FTC File No. 101 0023).

According to the FTC, IDEXX has monopoly power in the market for POC diagnostic products. These products include rapid assay tests, equipment, and supplies that permit a companion animal veterinarian to test, diagnose, and treat certain conditions such as heart worm during a single office visit. POC diagnostic products provide real-time results that cannot be obtained through other testing alternatives, such as services offered by outside reference labs. The FTC charged that IDEXX dominates the POC testing market, and that it engaged in monopolistic conduct by barring its distributors from carrying any competing POC diagnostic testing products.

Under the terms of a proposed FTC consent order, IDEXX has agreed to drop its exclusive-dealing arrangements with a top distributor. The proposed order prohibits IDEXX from maintaining concurrent exclusive distribution agreements with all three top tier distributors for the next 10 years. IDEXX will be prohibited from retaliating against non-exclusive distributors, withholding products, or using other means to limit the distributor’s sales of other manufacturer’s products. In addition, all future non-exclusive agreements between IDEXX and one of the three national distributors must meet the requirements of the proposed order, and will begin with a two-year term, followed by renewal terms of at least one year, according to the FTC.

IDEXX Response

“We are very pleased that the Commission has acted quickly in preliminarily approving the consent agreement that we reached with the Bureau of Competition staff just a couple of weeks ago,” said Jonathan Ayers, IDEXX Chairman and Chief Executive Officer, in a December 21 company statement. “While we admit no wrongdoing and continue to believe that our distribution practices do not violate the antitrust laws as these same practices have been upheld in previous litigation victories, this is another important step toward final resolution of the multi-year FTC investigation, which we now expect to occur early in 2013.”

Craig P. Seebald (Vinson & Elkins LLP) for IDEXX Laboratories, Inc.

News: Antitrust FederalTradeCommissionNews