## Facts

- Concrete block manufacturers allegedly conspired to fix prices for concrete blocks in violation of Sherman Act § 1.
- The sales chain ran from manufacturers to masonry contractors to general contractors; Illinois and roughly 700 local governmental entities bought construction projects from general contractors rather than buying blocks directly.
- The governmental entities claimed the manufacturers’ overcharge was passed through intermediaries and ultimately borne by them.
- Respondents sued for treble damages under Clayton Act § 4 as persons “injured in [their] business or property.”
- The district court granted partial summary judgment for defendants against the indirect-purchaser plaintiffs, reasoning only direct purchasers could recover for the alleged overcharge.
- The court of appeals reversed, allowing indirect purchasers to recover if they proved the overcharge was passed on.
- The Supreme Court granted certiorari.

## Issues

1. Whether indirect purchasers may recover treble damages under Clayton Act § 4 by alleging and proving that an illegal overcharge was passed on to them through intermediaries.
2. Whether the rule barring defendants from using a pass-on defense against direct purchasers implies a reciprocal bar on indirect purchasers using pass-on offensively.
3. Whether allowing indirect-purchaser pass-on claims would create unacceptable risks of duplicative recovery and unmanageable damages litigation.

## Decision

- The Supreme Court reversed the court of appeals.
- The Court held that, absent overruling or limiting prior precedent, Clayton Act § 4 authorizes overcharge damages recovery by direct purchasers, not by indirect purchasers asserting pass-on.
- The Court reasoned that permitting indirect-purchaser pass-on suits would risk multiple liability and overlapping recoveries because direct purchasers could still recover the full overcharge while indirect purchasers sought the same amount.
- The Court further held that tracing pass-on through multiple distribution levels would require complex, speculative economic inquiries that would burden courts and treble-damages litigation.
- In dissent, Justice Brennan (joined by Justices Marshall and Blackmun) argued the statutory text allows any injured person who can prove injury to recover, and that a categorical bar weakens compensation and deterrence; Justice Blackmun separately warned the extension of prior precedent would exclude ultimate payers even when proof is feasible.

## Legal Principles

- Under federal antitrust law, only direct purchasers from an alleged antitrust violator may recover Clayton Act § 4 treble damages for an overcharge.
- An indirect purchaser may not obtain federal treble damages by asserting that the overcharge was passed on through intermediaries.
- The pass-on concept is treated symmetrically: because pass-on is generally unavailable as a defense to reduce a direct purchaser’s recovery, it is likewise unavailable as an affirmative damages theory for indirect purchasers.
- The direct-purchaser limitation is supported by concerns about duplicative recovery, multiple liability for a single overcharge, and administratively unworkable damages allocation across distribution levels.

## Conclusion

The Court adopted a direct-purchaser rule for federal treble-damages actions, barring indirect purchasers from recovering based on pass-on allegations and concentrating damages recovery at the first purchaser level to avoid duplicative liability and complex pass-through litigation.


Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977)