Tuesday, August 12, 2003

Antitrust News: DOJ Loses to Dentures

Contrary to popular myth, a government antitrust prosecution does not inevitably result in a government victory, as one company happily found out last week:
A judge in the U.S. District of Delaware recently ruled in favor of Dentsply International’s distribution practices of artificial teeth.

The decision came down late Friday afternoon and the outcome is positive for the company and its shareholders, said John C. Miles II, chairman and CEO of the dental product designer and manufacturer.

Though artificial teeth represent about 5 percent of the company’s business and don’t have a great impact on earnings per share, Miles said the decision removes a level of uncertainty and could save legal fees if the government decides not to appeal.

Gina Talamona, spokeswoman for the U.S. Department of Justice, said it’s too soon to say if the department will appeal.

The Antitrust Division of the United States Department of Justice began investigating the company for antitrust violations in 1995, Security and Exchange Commission documents state.

Within the company’s Trubyte Division’s distribution clause, Dentsply maintains the right to pull its products from the distributor if the distributor decides to carry competing products.

In 1999, the federal government filed suit against the company saying that this clause affected 80 percent of dealers nationwide because they don’t carry brands that compete closely with Dentsply’s products.

In April and May 2002, a trial took place leading to the recent decision.

On Monday, Miles said the company holds the distribution policy because it invests time and money into training the distributor’s employees on the products, which are similar among competing products. If it allowed its distributors to carry other products, it would be training them for free, he said.

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