Rebuilding Illinois Brick: A Functionalist Approach to the Indirect Purchaser Rule
42 Pages Posted: 12 Apr 2007 Last revised: 4 Aug 2012
Date Written: November 2007
The landmark case of Illinois Brick Co. v. Illinois, which denied standing to indirect purchasers to sue antitrust violators, has been subjected to steady and widespread criticism since it was decided in 1977. Despite three decades of dissatisfaction, however, debate over indirect purchaser standing has failed to generate satisfying solutions that meet the objectives of antitrust law and reflect its underlying principles. We attribute the lack of creative alternatives to an undue emphasis on legal formalism, fostered both by the Supreme Court's elaboration of the indirect purchaser rule and the doctrine's failure to recognize the pervasiveness of multilayer supply chains. In this Article, we argue for a return to functionalist antitrust objectives. We review the development of the doctrine, explain its descent into formalism, identify its significant shortcomings, and offer a comprehensive framework that addresses the difficult problem of antitrust standing. Building off that framework, and drawing on lessons from securities law, we propose a mechanism that opens antitrust suits to indirect purchasers, consolidates multiple claims into a single proceeding, and designates a presumptive lead plaintiff. Such a mechanism will enhance the impact of underenforced antitrust laws, restore compensation to injured parties, and reduce the administrative and agency costs of parallel litigation.
Keywords: Antitrust Standing, Indirect Purchaser Rule, Illinois Brick
JEL Classification: K21, K41, L40
Suggested Citation: Suggested Citation