Understanding the Indirect-Purchaser Doctrine in Antitrust Law
Definition & Meaning
The indirect-purchaser doctrine is a principle in antitrust law that prevents individuals or entities who do not purchase goods directly from the seller from seeking damages for antitrust violations. This doctrine is designed to address the complexities of pricing in a multi-tier supply chain, where middle parties may distort the actual prices paid by end consumers. Essentially, it means that only direct purchasers can claim compensation for illegal pricing practices, while indirect purchasers are barred from recovering damages.
Legal Use & context
This doctrine is primarily used in antitrust litigation, particularly in cases involving price discrimination and monopolistic practices. It is relevant in civil law, where individuals or businesses may seek legal recourse against companies that engage in unfair pricing strategies. Users can manage certain aspects of these cases themselves using legal templates from US Legal Forms, but complex situations may require professional legal assistance.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A retailer purchases a product from a manufacturer at a set price. If the manufacturer illegally raises the price, the retailer can sue for damages. However, if a consumer buys the product from the retailer at the higher price, they cannot sue the manufacturer for damages as they are an indirect purchaser.
Example 2: A wholesaler buys goods at a discounted rate but later sells them to a distributor at a higher price due to an illegal overcharge by the manufacturer. The wholesaler can take legal action against the manufacturer, but the distributor cannot. (hypothetical example)
Relevant laws & statutes
The indirect-purchaser doctrine is primarily shaped by two landmark Supreme Court decisions:
- Hanover Shoe v. United Shoe Mach. Corp., 392 U.S. 481 (1968) - This case allows direct purchasers to recover the full amount of illegal overcharges.
- Ill. Brick Co. v. Ill., 431 U.S. 720 (1977) - This case denies standing to indirect purchasers, regardless of the overcharge passed on to them.