Healthy competition is a cornerstone of the American economy. While price is largely a result of supply and demand, everyone should be able to come to the playing field and compete in a free market. Market forces should determine who is competitive and successful and who fails due to poor quality or inflated price tags. But when big businesses collude together to fix prices artificially or block smaller competitors, it is the consumer who suffers. This concept is true for any product, including dental supplies.
A Federal Trade Commission (FTC) administrative judge recently found compelling evidence that three large dental manufacturers/suppliers – Benco, Schein, and Patterson – conspired to prevent dental buying groups from accessing legitimate discounting and discouraged them from offering competing products to their customers. Also known as group purchasing organizations (GPOs) or buying clubs, buying groups are composed of independent dental practitioners who collectively negotiate savings on dental supplies. These groups provide small “mom and pop” dentists with the same discount opportunities that large group practices or corporate dental groups enjoy.
The big three companies mentioned above feared the effect this group buying power could have on their profits. Instead of competing honestly for buying groups’ business, Benco, Schein, and Patterson agreed to shut out these buying groups. In other words, they conspired to withhold discounts from buying groups and even collectively refused to negotiate with these groups.
The directive to “blacklist” buying groups came from the highest levels of these powerful companies, and the FTC judge found that they likely violated the antitrust provisions of the Sherman Act. The executives’ actions were egregious, and the evidence was overwhelming. For example, here is an excerpt of an email that Chuck Cohen, the managing director at Benco, sent to other Benco officials when he heard that Patterson was considering offering discounts to the New Mexico Dental Cooperative buying group:
“We don’t recognize buying groups… I’ll reach out to my counterpart at Patterson to let him know what’s going on…”
Cohen sent an email to Paul Guggenheim, the president of Patterson, and Guggenheim responded:
“Thanks for the heads up. I’ll investigate the situation. We feel the same way about these.”
Guggenheim then ordered his vice president of sales to pull out of the New Mexico partnership. These are just small examples of the conspiracy. The emails and phone calls went on and on, with Schein taking part as well. The three companies canceled appearances at buying group trade shows and continued to encourage each other not to work with buying groups.
Fortunately, this unethical and illegal conduct has not gone unanswered. The FTC has denied a motion put forth by Patterson for summary dismissal of the charges, and the case will go to trial.
Although it seems like the big companies will use every dirty trick to stifle competition and keep prices artificially high, some businesses still work for the little guys. While huge outfits like the three companies in the FTC action are beholden to their shareholders and ultra-wealthy executives, Noble Dental Supplies works for the benefit of our customers – no matter how small or large.
We have been in the dental supply industry for 40 years and remain dedicated to providing high-quality products at significantly discounted prices. We built our reputation on personal relationships, and we will never compromise on quality or dependable service.