27 Pages Posted: 18 Jun 2008
Date Written: June 17, 2008
The Antitrust Modernization Commission has proposed that Congress abandon the thirty-year-old federal policy of Illinois Brick. The proposal would weaken the federal right of action for direct purchasers by reviving the passing-on defense, but would create a new federal right of action for indirect purchasers. Although federal rights of action under the proposed regime would not be exclusive, state law claims would be subject to expanded federal jurisdiction to allow consolidation of all claims in a single court for both discovery and trial. All recoveries in the consolidated actions would be limited to the initial overcharge, trebled. Congress should not adopt these proposals, for two primary reasons. First, a pure direct purchaser regime would provide the most efficient means of imposing a deterrent penalty equal to three times the overcharge. Second, even if compensation is an appropriate goal, indirect purchaser suits is will not achieve it. We are all indirect purchasers of goods that are more expensive because of antitrust violations; most of us have even received notice that we were members of putative or certified classes. But our harms are usually too diffuse, too individualized, and too small for the courts to calculate and distribute efficiently. The legal system should focus its energies on imposing the appropriate deterrent penalty for antitrust violations at the lowest possible direct cost.
Keywords: antitrust, indirect purchaser, class certification, private antitrust remedies, state antitrust law, Antitrust Modernization Commission
JEL Classification: D42, D60, K21, K40, K41, K42, L12, L41
Suggested Citation: Suggested Citation
Page, William H., Class Interpleader: The Antitrust Modernization Commission's Recommendation to Overrule Illinois Brick (June 17, 2008). Available at SSRN: https://ssrn.com/abstract=1147200 or http://dx.doi.org/10.2139/ssrn.1147200