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FTC clears Melville-based Henry Schein of conspiracy in dental case

Henry Schein has

Henry Schein has "denied these allegations from the very start," said chairman and chief executive Stanley M. Bergman. Credit: Newsday/J. Conrad Williams Jr.

Henry Schein Inc. was cleared Wednesday in an initial ruling by a Federal Trade Commission judge who found that two rivals were guilty of conspiring against dental product buying groups.

D. Michael Chappell, the chief administrative law judge of the FTC, held that Melville-based Henry Schein did not conspire to refuse to offer discounts or compete for the business of buying groups and dismissed charges against the company.

Two other distributors, Benco Dental Supply Company of Pittston, Pennsylvania, and Patterson Companies Inc. of St. Paul, Minnesota, were found complicit in efforts to undermine the buying groups, which are formed to help solo and small-group dental practices negotiate lower prices.

The FTC issued an administrative complaint against the companies in February 2018.

“We have publicly denied these allegations from the very start of this matter,” said Stanley M. Bergman, chairman and chief executive of Henry Schein. “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.”

In its response to the FTC complaint, Schein maintained it had a long history of doing business with buying groups and made any decisions about them independently.

Henry Schein, which also distributes medical supplies, is Long Island's largest public company based on 2018 revenue of $13.2 billion.

Shares of Henry Schein climbed 1 percent to close Wednesday at $62.45.

The initial 245-page ruling dated Tuesday was announced by the FTC on Wednesday. Chappell's decision is subject to review by the full FTC and can be appealed by the parties.

The complaint against the dental product distributors did not seek monetary penalties, but called for a "cease and desist" order barring the companies from "distorting prices and undermining efforts by dentists to lower prices."

Henry Schein, Benco and Patterson together control 85 percent of the $10 billion market for dental products and services nationwide through distributors, according to the complaint.

The initial ruling calls for Benco and Patterson to "cease and desist" from entering into an agreement relating to buying groups and maintain anti-trust compliance programs and file reports to the FTC.

In a separate FTC case, Henry Schein in January 2016 agreed to pay $250,000 to settle charges that it falsely advertised the level of encryption provided by its Dentrix G5 software for dentists’ practices.

Henry Schein also was named as a  defendant along with other medical distributors in a federal opioid lawsuit that is expected to be tried in Cleveland this month.

Shares of Patterson closed down 0.5 percent to $17.23 on Wednesday. "We strongly disagree with any finding against Patterson and believe the facts demonstrate the company's independent decision-making," the company said in a statement.

A spokeswoman at closely held Benco said it looks forward to "the appellate process to show that neither the facts nor the law support the FTC claim against Benco." 
 

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