Supreme Court Holds App Store Buyers Are Direct Purchasers Under Long-Standing Antitrust Doctrine

  • United States
  • 05/15/2019
  • Duane Morris LLP

May 15, 2019
In federal antitrust law, the Illinois Brick doctrine holds that only the direct purchaser of goods may bring an antitrust claim for damages against a producer or manufacturer of the goods.
On May 13, 2019, a divided U.S. Supreme Court reaffirmed the application of the Illinois Brick doctrine in Apple Inc. v. Pepper. The case involves claims that Apple monopolizes the market for iPhone apps via its App Store under the federal antitrust laws. The majority, delivered by Justice Kavanaugh and joined by Justices Ginsburg, Breyer, Sotomayor and Kagan, held that iPhone owners were direct purchasers who may sue Apple for alleged monopolization under a straightforward application of Illinois Brick v. Illinois. Justice Gorsuch, joined by Chief Justice Roberts and Justices Thomas and Alito, dissented by arguing that iPhone owners are indirect purchasers. Read together, the majority and the dissent suggest that Illinois Brick is alive and well, despite recent skepticism and vigorous debate over its continued viability.

In federal antitrust law, the Illinois Brick doctrine holds that only the direct purchaser of goods may bring an antitrust claim for damages against a producer or manufacturer of the goods. Indirect purchasers, those further down the distribution chain, have no standing to bring a federal antitrust claim under the doctrine. Plaintiffs, iPhone owners, argued that they were direct purchasers of apps from Apple, while Apple argued that iPhone owners were indirect purchasers because the app developers—not Apple—set the prices for the apps. The divided Court sided with the plaintiffs.(continue…)

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