United States v. Dentsply International, Inc.

Dentsply International, Inc. (Dentsply) (defendant) manufactured artificial teeth. Dentsply was the dominant manufacturer of artificial teeth in the United States, with a consistent market share of 75 to 80 percent. Dentsply’s main competitors were two companies who primarily sold European molds for artificial teeth and focused their United States-based marketing on their other, nontooth products. Artificial teeth were typically sold through one of three channels: (1) dental dealers, (2) dental labs, or (3) a hybrid approach combining dealer and lab sales. Dentsply sold its teeth exclusively through certain dental dealers. Dentsply was working with 23 of hundreds of available dealers in the market. Dentsply’s closest competitors sold directly to labs. Beginning in 1993, Dentsply notified its existing dealers that they could not add new, competing tooth brands to their product offerings or they would risk losing Dentsply’s business. Dentsply’s dealers could continue selling any brands they currently offered. Internal Dentsply documents confirmed that the purpose of this rule was to exclude competition. Going forward, Dentsply monitored dealer compliance, dropping dealers who added new brands and sometimes requiring new dealers to stop selling some or all other competing brands. The United States Department of Justice (DOJ) (plaintiff) sued, alleging that Dentsply’s exclusive dealing arrangement with its dealers violated Sections 1 and 2 of the Sherman Act. DOJ argued that the agreements unreasonably restrained trade because Dentsply’s competitors could not compete effectively without access to Dentsply’s dealers. Dentsply justified its conduct by arguing that having its dealers focus only on Dentsply’s products made distribution more efficient, resulting in increased profits. Dentsply also pointed out that many dealers did not work with Dentsply at all and that its current dealers were free to stop working with Dentsply at any time.