Peeling Apple: Antitrust Standing and Intermediary Defendants

By John E. Lopatka (The Pennsylvania State University)

When market intermediaries unlawfully acquire market power, vertically related market participants may sue under the antitrust laws to recover damages. Their ability to recover depends upon an intricate set of doctrines that define private standing, including the indirect-purchaser rules set down by the Supreme Court most notably in Illinois Brick. In Apple Inc. v. Pepper, the Court decided the application of the indirect-purchaser rules to a particular kind of intermediary, a platform in a two-sided market. The Article explores private antitrust standing doctrines as they apply to market intermediaries, using Apple to frame the exposition. The Court there held that iPhone owners are not barred by Illinois Brick from recovering damages from Apple for monopolizing the distribution of iPhone apps. The Article argues that the Court may have reached the right result, but not for the right reason. The dissent and Apple reached the wrong result, or at least did not offer the right reason. Apple imposed an ad valorem charge for using its platform in a two-sided transaction market, and in these circumstances, whether iPhone users had a right to sue for damages depends on whether the marginal costs of distribution were positive, a condition that was not addressed.

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