Illinois Brick Co. v. Illinois

In Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) the United States Supreme Court held that purchasers of concrete blocks, who had paid enhanced prices for their purchases because their suppliers had been victimized by a price fixing conspiracy, could not bring a federal anti-trust action because they were indirect purchasers. The United States Supreme Court held that indirect purchasers of a product could not sue under federal antitrust laws for damages caused by price-fixing, should be followed in Arizona. The trial court agreed and granted appellees' motion to dismiss. The State of Illinois, on its own behalf and on behalf of 700 local governmental entities, sued manufacturers and distributors of concrete block under section 4 of the Clayton Act, alleging that the defendants had conspired to fix prices in violation of section 1 of the Sherman Act. 431 U.S. at 726- 27. The manufacturers sold the block to masonry contractors who were hired by general contractors to construct buildings using the block. 431 U.S. at 726. The buildings were then sold to state and governmental entities. Id. The United States Supreme Court held that the plaintiffs, who were indirect purchasers of concrete block, were not parties injured in their business or property for purposes of the federal antitrust laws. 431 U.S. at 728-29. In Illinois Brick, the plaintiffs sought to use the pass- on theory offensively, arguing that they were injured parties because the illegal overcharge was passed on to them through intermediate distribution channels. 431 U.S. at 726. The Court concluded that if the pass-on theory could not be used defensively by an antitrust violator against a direct purchaser, it also could not be used offensively by an indirect purchaser against an alleged violator. 431 U.S. at 728-29. It reasoned that allowing the use of the pass-on theory offensively but not defensively would create a serious risk of multiple liability for defendants. 431 U.S. at 730-31. The Illinois Brick Court also believed that if indirect purchasers were allowed to bring price-fixing actions, the uncertainties and difficulties in analyzing price and out-put decisions, as well as the complexity of multiparty litigation involving many distribution levels and including large classes of ultimate consumers remote from the defendant, would undermine the efficient enforcement of the antitrust laws. 431 U.S. at 731-32, 737-38.