July 27, 2022
Pet owners across the country hit IDEXX Laboratories with a proposed class action Monday in California federal court, accusing the animal health diagnostic services company of abusing its monopoly power and throttling the competition, which purportedly led to artificially inflated prices of test kits.
In a lengthy, 92-page complaint alleging violations of antitrust and numerous state consumer protection laws, pet owners said IDEXX has manipulated the market since 2018 to stake its dominant power in the animal diagnostic test kit space by shifting from distribution agreements to direct-sale, long-term exclusive agreements with veterinary practices.
The switch came after the Federal Trade Commission in 2013 stepped in to stop IDEXX from using exclusive distribution contracts and ordered its future distribution contracts to be nonexclusive and capped at two years, with a one-year renewal provision, the pet owners alleged Monday.
But that did nothing to restore competition, according to the suit.
“As the ink dried on its consent agreement with the FTC, IDEXX pivoted away from the distributor channel and began imposing long-term exclusive dealing contracts directly on veterinary practices as a means of continuing to lock in its dominant market position,” the pet owners alleged.
After the FTC action, IDEXX “upended its entire distribution network,” according to the pet owners. In 2015, the company said in its Form 10-K that it would take orders directly from veterinary practices, then ship the products, invoice, and receive payment for all its single-use rapid test kits and consumables, according to the suit.
These contracts typically run for six years, but IDEXX can lengthen them by including an automatic renewal provision. IDEXX extends most contracts well before their expiration, which ensures the contracts run longer than the six-year term, the pet owners alleged.
The case was brought by pet owners hailing from more than a dozen states, including California, Florida, Arizona, Massachusetts and New York, alleging that IDEXX blocked rivals and would-be competitors from entering the diagnostic testing market, which allowed IDEXX to charge supracompetitive prices for its products.
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The pet owners are represented by Joshua P. Davis, Eric L. Cramer, Michael J. Kane, Andrew C. Curley, Najah A. Jacobs and Daniel Walker of Berger Montague, Brent W. Johnson, Richard A. Koffman, Daniel McCuaig, Daniel H. Silverman and Zachary Krowitz of Cohen Milstein Sellers & Toll PLLC and Jennie L. Anderson and Lori E. Andrus of Andrus Anderson LLP.
Read the article on Law360.