Originally published in Competition Law360 January 19, 2012.
Since the enactment of the Class Action Fairness Act (“CAFA”), 28 U.S.C. §1332(d), federal district courts handling indirect purchaser price fixing and market allocation cases have been confronted with arguments by defendants that indirect purchaser plaintiffs asserting antitrust claims under federal and state law lack antitrust standing. These arguments rely on the Supreme Court’s decision in Assoc. Gen. Contractors of Cal. v. Cal. State Council of Carpenters (“AGC” ), and assert, for example, that indirect purchasers’ antitrust injuries are too remote from the defendants’ unlawful conduct or are not the type of injury the antitrust laws were intended to prevent. This article provides a general overview of the application of AGC in such cases, and describes trends in indirect purchaser cases that may be of interest to antitrust practitioners handling such matters.
AGC directed federal courts to apply a five-factor test to “evaluate the plaintiff’s harm, the alleged wrongdoing by the defendants, and the relationship between them to determine whether a plaintiff is a proper party to bring an antitrust claim.” These factors are: “(1) the nature of the plaintiff’s alleged injury; that is, whether it was the type the antitrust laws were intended to forestall; (2) the directness of the injury; (3) the speculative measure of the harm; (4) the risk of duplicative recovery; and (5) the complexity in apportioning damages.” AGC was decided several years after Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), which held that, by and large, indirect purchasers should not be permitted to maintain a claim for damages under federal antitrust law. In response to Illinois Brick, many states created Illinois Brick “repealer” provisions that permitted, by statute or case law, indirect purchasers to maintain damages claims under state-law antitrust statutes. The Supreme Court later rejected a preemption challenge to these “repealer” provisions, and affirmed the right of the states to provide indirect purchasers with redress for their antitrust injuries.
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