Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Leading dental supplies distributors allegedly conspired to boycott new low cost competitors, (Jan 22, 2016)

By Linda O’Brien, J.D., LL.M.

Three leading distributors of dental supplies and equipment engaged in a conspiracy to boycott state dental associations, dental supplies laboratories, and dental supplies manufacturers that do business with new lost cost distributors in order to eliminate competition, according to a complaint filed in the federal district court in Brooklyn, New York (Grodner v. Patterson Companies, Inc., January 21, 2016).

Patterson Companies, Henry Schein, Inc., and Benco Dental Supply Company are the three largest distributors of dental supplies and equipment in the United States. Robert Grodner owns and operates a private dental practice in Albuquerque, New Mexico.

The complaint states that, after a new distributor created an online dental supplies distribution platform that offered dental supplies at lower prices, the defendant distributors agreed to impede the progress of new competitors through unlawful threats and boycotts of entities that dealt with the new competitors. Specifically, the defendants threatened manufacturers and other distributors to cease supplying new lower-priced competitors with dental supplies and pressured state dental associations to cease doing business with these competitors.

According to Grodner’s complaint, the market for the distribution of dental supplies is highly concentrated. Patterson Companies, Henry Schein, and Benco Dental Supply together allegedly account for 80 to 90 percent of the all sales in the market. The defendants have a nationwide presence, while most competing distributors are local and regional entities with limited service areas. There are also high barriers to entry that increase the market’s susceptibility to a coordinated effort by the defendants to maintain supra-competitive prices, asserts Grodner.

As a result of the group boycotts, Grodner claims that other potential competitors are dissuaded from partnering with manufacturers and state dental associations to compete with the defendants. This misconduct has reduced competition in the dental supplies market, reduced consumer choice, and caused purchasers of dental supplies to pay artificially inflated prices, the complaint also alleges.

The plaintiff claims that the alleged agreements to boycott constitute an unreasonable restraint of trade in violation of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:16-cv-00345.

Attorneys: Sharon K. Robertson, Kit A. Pierson, and Christopher J. Cormier (Cohen Milstein Sellers & Toll PLLC) and Christopher V. Goodpastor (DiNovo Price Ellwanger & Hardy LLP) for Robert W. Grodner.

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

News: Antitrust NewYorkNews