The group called for the overturn of the Supreme Court’s ruling in Illinois Brick v.Illinois, Reuters reported. The 1977 precedent means that a purchaser can bring an antitrust claim under federal law against a supplier only if the claimant is the direct purchaser of the good, thereby prohibiting downstream purchasers in a supply chain from seeking antitrust action against original suppliers.
State AGs, have the power to bring antitrust suits in federal courts on behalf of consumers. Such federal suits, under the Clayton Antitrust Act of 1914, equip the plaintiffs to collect massive damages if successful. If the Supreme Court entertains the AGs’ proposal, it will substantially expand the size of the clubs they can use on big tech firms, a goal increasingly shared by policy makers on the left and right, reported Reuters.
In the view of the State AGs, Illinois Brick is outdated and needs to be done away with (a conclusion also reached by the bipartisan Antitrust Modernization Commission in its 2007 report to Congress).
“Illinois Brick is an atextual ruling based on a judicial perception of the reliability and burdensomeness of proving indirect purchaser damages and of the resulting incentives for suit,” the AGs’ brief said. “Since 1977, the economic theory and methodology used to calculate antitrust damages have evolved considerably. And most states now authorize indirect-purchaser claims under state antitrust law. That has led to decades of judicial experience in indirect-purchaser cases with damages analyses, which can no longer be categorically condemned as unreliable or unadministrable.”