## Facts

- Apple operates the App Store as the only authorized marketplace for iPhone applications.
- Independent developers create most apps, pay Apple an annual membership fee, set app prices subject to Apple’s pricing rules, and agree Apple keeps a 30% commission on app sales.
- Apple prohibits lawful iPhone app distribution outside the App Store and restricts installation of unapproved apps.
- iPhone owners alleged Apple monopolized the retail market for iPhone apps, enabling Apple to charge a supracompetitive 30% commission that resulted in higher app prices for consumers.
- Consolidated consumer class actions were dismissed by the district court for lack of antitrust standing under the Illinois Brick indirect-purchaser rule.
- The Ninth Circuit reversed, holding iPhone owners purchased apps directly from Apple and therefore qualified as direct purchasers.
- The Supreme Court granted review on the threshold standing question under § 4 of the Clayton Act, not on the merits of the monopoly claim.

## Issues

1. Whether iPhone owners who buy apps through the App Store are “direct purchasers” from Apple under Illinois Brick and thus may sue for damages under § 4 of the Clayton Act.
2. Whether “direct purchaser” status depends on the immediate buyer-seller relationship with the alleged antitrust violator or instead on a pass-through theory tied to who sets the retail price and bears the alleged overcharge.
3. Whether allowing the consumer suit creates unacceptable risk of duplicative recovery inconsistent with Illinois Brick’s limits on damages actions.

## Decision

- The Court affirmed the Ninth Circuit in a 5–4 decision (Justice Kavanaugh).
- iPhone owners who purchase apps from the App Store are direct purchasers from Apple and are not barred by Illinois Brick from seeking damages.
- The Court rejected Apple’s argument that developers are the true sellers because they set prices and Apple merely collects a commission.
- The Court emphasized the ruling addressed only who may sue under Illinois Brick; it did not decide whether Apple’s conduct violates antitrust law.
- The dissent (Justice Gorsuch) would have barred the suit as resting on an overcharge passed through from Apple’s commission, warning of duplicative recovery and increased pass-on disputes.

## Legal Principles

- Under Illinois Brick, the “immediate buyers” from the alleged antitrust violator may sue for damages under § 4 of the Clayton Act; purchasers farther down a distribution chain generally may not.
- Direct-purchaser status turns on the buyer’s immediate transaction with the alleged violator, not on who sets the price or how the parties describe the arrangement.
- Courts should not permit transaction structuring to defeat consumer standing where the alleged violator is the retailer selling directly to the consumer.
- Concerns about overlapping recoveries matter, but where the plaintiffs sue the retailer that directly sold to them and no separate plaintiff is positioned to claim the same retail overcharge, the duplicative-damages rationale does not bar suit at the standing stage.

## Conclusion

The Supreme Court held that consumers who buy iPhone apps from Apple through the App Store are direct purchasers entitled to seek Clayton Act damages against Apple, limiting Illinois Brick’s bar to purchasers who are not immediate buyers from the alleged antitrust violator.


Apple Inc. v. Pepper, 587 U.S. 273 (2019)