Illinois Brick: A Look Back and a Look Ahead

Authors

Edward D. Cavanagh, St. John's University School of LawFollow

Document Type

Article

Publication Title

Loyola Consumer Law Review

Publication Date

2004

Volume

17

First Page

1

Abstract

(Excerpt)

In June 1977, the United States Supreme Court decided Illinois Brick Co. v. Illinois, ruling that only those dealing directly with price-fixers, and not others in the chain of distribution, are "injured" within the meaning of Section 4 of the Clayton Act in price-fixing cases. The decision struck the death knell to claims by indirect purchasers that illegal overcharges incurred by first purchasers had been passed-on to them through the distribution chain. The so-called direct purchaser rule of Illinois Brick was clear and unequivocal, the very essence of a bright-line rule. Yet, after over a quarter century, the decision remains controversial. Opponents of Illinois Brick have been both resourceful and persistent. While these opponents have failed in their efforts to see Illinois Brick repealed in Congress or directly overturned by the Supreme Court, they have effectively undermined Illinois Brick through statutory repealers under state law and through the Supreme Court decision in California v. ARC America Corp. ARC America held that Illinois Brick neither preempts states from enacting indirect purchaser statutes nor does it bar the federal courts from entertaining state law indirect purchaser claims. As a direct result of ARC America, federal courts now regularly entertain, through removal or supplemental jurisdiction, issues involving passing-on under state law, which they are precluded from hearing under federal law by Illinois Brick. Illinois Brick continues to inspire passionate arguments in the antitrust community with debaters both for and against the Illinois Brick rule asserting their views with near religious fervor. Unfortunately, that fervor has had the side-effect of clouding the underlying issues and promoting policy choices that may not be grounded in real-world experience. This article will: (1) review the Illinois Brick decision and its impact on the evolution of antitrust doctrine; (2) analyze the rule of Illinois Brick in light of a variety of policy considerations to determine the soundness of the rule; (3) review the judicial experience in indirect purchase suits in the post-ARC America era to ascertain whether any change in the direct purchaser rule is warranted; and (4) discuss the implications of Illinois Brick in answering the broader question of the proper role of state regulators and state law in the overall antitrust enforcement picture.

Comments

Available at: https://lawecommons.luc.edu/lclr/vol17/iss1/2/