AN ECONOMIC TREATMENT OF PASS THROUGH IN INDIRECT PURCHASER ANTITRUST LITIGATION

By Armando Levy and David Sunding¹

In order to be certified as a class action, indirect purchasers in Illinois Brick repealer states carry the burden of showing antitrust impact through common proof on a classwide basis. In this article, we describe the most recent results in the economics and marketing literature regarding retail pass through.

I. INTRODUCTION

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), established a doctrine that only direct purchasers of product and services suffering from antitrust injury have standing to sue under federal antitrust law.² However, indirect purchaser plaintiffs have been able to establish standing under state laws in the so-called Illinois Brick "repealer" states since California v. ARC America Corp., 490 U.S. 93 (1989). In ARC America, the Supreme Court held that Illinois Brick interpreted only federal antitrust law and states could allow indirect purchasers to seek damages under state law.³ Many states and the District of Columbia reaffirmed an indirect purchaser’s right to recover damages by passing Illinois Brick repealer statutes that expressly allow for indirect purchaser actions.⁴