Case review of Apple v. Pepper  Harvard Law Review (2019) 33 382

Since Illinois Brick, standing to sue for violation of US federal antitrust law has been reserved exclusively to those parties who purchased directly from price-setting monopolists or cartelists. Indirect purchasers, who transacted with these direct purchasers rather than with the monopolist itself, had no standing, even if the direct purchaser “passed on” the full cost of the monopolistic overcharge to them in the form of higher prices. The Court prohibited these pass-through arguments because it judged itself ill suited to efficiently determine what parts of an overcharge are passed on at any given stage in the chain of distribution. The Court also worried that allowing pass-through arguments would undermine deterrence, as indirect purchasers, who could not sue as effectively as direct purchasers, would be able to claim a portion of what would previously have gone to direct purchasers in a successful suit. Last year, however, the Supreme Court in Apple v Pepper held that app purchasers could sue Apple for…

Herbert Hovenkamp ‘Apple vs. Pepper: Rationalizing Antitrust’s Indirect Purchaser Rule’ (2020) Columbia Law Review Forum 120(1) 14

The simplest measure of loss caused by an antitrust infringement is the amount of the overcharge caused by a conduct. However, customers of the infringing party may be able to pass on this overcharge to their own customers, which means that indirect purchasers may also suffer loss. The US – unlike other countries – typically limits the ability to claim damages to direct purchasers for the amount of the relevant overcharge (typically trebled). In Apple Inc. v. Pepper, the Supreme Court held that consumers who allegedly paid too much for apps sold on Apple’s App Store because of an antitrust violation could sue Apple for damages because they were “direct purchasers”. The paper, available here, argues that, working within the context of applicable rules, the majority reached the right conclusion. At the same time, and while this judgment eliminates some of the irrationalities of the indirect purchaser rule as it has been applied, it hardly adopts a definite solution to the…

Andrew Gavil ‘Consumer welfare without consumers? Illinois Brick after Apple v Pepper’ (2019) Journal of Antitrust Enforcement 7 447

This essay, available here, examines the recent Apple v Pepper decision with a focus on two issues: its seeming rehabilitation of compensation principles and its approach to evaluating antitrust damages. Together, these two aspects of the Court’s reasoning may undermine the continued vitality of Illinois Brick’s decision not to allow indirect purchasers to claim for damages. The author argues that, although the Supreme Court formally retained Illinois Brick, the Court’s logic in explaining the nature of damages that flow from antitrust violations will prove hard to contain and difficult to reconcile with Illinois Brick’s simplistic conception of ‘pass-on’. That, in turn, will likely alter how parties litigate antitrust damage claims in ways likely to invite future challenges to Illinois Brick. Apple v Pepper also may have reopened long-simmering debates in the USA about how best to balance the twin remedial goals of deterrence and compensation. Given the evolution over four decades of a fairly intricate federal-state, public–private enforcement ecosystem in the USA,…