The complaint says that PetSmart, three pet food manufacturers and two veterinary clinic chains colluded to fix prices on four brands of prescription pet food that have trumped up health benefits, as they do not contain a drug but require prescription authorization. The consumer complaint also says Mars Petcare USA Inc.'s majority ownership of Banfield Pet Hospital, which has about 900 locations inside PetSmart stores, and its sole ownership of Blue Pearl Vet Hospital chain allows the defendants to implement their price-fixing agreement.
"The prescription authorization and defendants' marketing regarding prescription pet food are not pursuant to a legal prescription regime, but rather a false and misleading marketing scheme to which all defendants adhere," the complaint says.
Defendants include Banfield Pet Hospital, whose business name is Medical Management International Inc., and Mars Petcare US Inc., Nestle Purina Petcare Co., Hill's Pet Nutrition Inc., PetSmart Inc. and Bluepearl Vet LLC. Pet food brands at issue include Hill's "Prescription Diet," Purina's "Pro Plan Veterinary Diets," and Mars' Royal Canin "Veterinary Diet" and Iams "Veterinary Formula."
The complaint says Mars owns 79 percent of Banfield, and that PetSmart owns the remainder. The clinic chain has about 3,200 locations across the country, including around 900 in PetSmart stores, according to the complaint.
Mars also owns Blue Pearl Vet Hospital, which has around 50 clinics across the country, and as a result controls about 7.5 percent of all companion-animal veterinarians in the U.S., the complaint says.
"PetSmart sells nonprescription pet foods made by all defendant manufacturers, and uses its relationship with Banfield to promote and sell prescription pet food," the complaint says. "Blue Pearl Vet Hospital sells prescription pet food. Through this vertical integration and common ownership and control of distribution and prescription-writing for prescription pet food, defendants are able effectively to implement their price-fixing agreement."
The prescription pet food from Mars, Purina and Hill's doesn't contain any drugs or ingredients that are approved by the FDA, the complaint says, noting that the brands make nonprescription products marketed for the same conditions that are available at lower costs. But pet owners with "heartfelt concerns" for their pets and a deep-rooted sense of the role of prescriptions in health care may believe otherwise, and are likely to expect that a prescription product at a higher price point contains a drug or medicine, according to the complaint.
"Except for the prescription authorization and other practices of the defendants described herein, there is no material difference between prescription pet food and nonprescription pet food," the complaint says. "To the extent there are any differences, they are not sufficient to explain the price disparity between prescription pet food and nonprescription pet food."
The defendant manufacturers are all part of the Pet Food Institute trade association, which allows them to promote "their price-fixing agreement," the complaint says.
The suit accuses all defendants of violating the Sherman Act by entering a conspiracy to fix prices, leading to anti-competitive effects and unjustifiably high costs. It asserts California state law claims against Mars and Hill's for suggesting their products are some sort of drug or medicine.
Proposed classes include a nationwide class of any consumers who bought prescription pet food from PetSmart, Banfield Pet Hospital, Blue Pearl Vet Hospital or any other defendant, as well as a California statewide class for those who purchased Royal Canin prescription pet food, and another for those who purchased Iams prescription pet food.
PetSmart does not comment on pending litigation, a spokesperson told Law360. Other defendants could not immediately be reached for comment Thursday.
The plaintiffs are represented by Michael A. Kelly, Matthew D. Davis and Spencer J. Pahlke of Walkup Melodia Kelly & Schoenberger; Daniel Shulman and Julia Dayton Klein of Gray Plant Mooty Mooty & Bennett PA; Lynwood P. Evans, Edward J. Coyne III and Jeremy M. Wilson of Ward and Smith PA; and Michael L. McGlamry, Wade H. Tomlinson III and Kimberly J. Johnson of Pope McGlamry PC.
Counsel information for the defendants wasn't immediately available Thursday.
The case is Moore et al. v. Mars Petcare US Inc. et al., case number 3:16-cv-07001, in the U.S. District Court for the Northern District of California.
--Editing by Catherine Sum.
