## Facts

- UtiliCorp United Inc., a regulated public utility in Kansas and western Missouri, bought natural gas from a pipeline company and resold it to residential and commercial customers.
- UtiliCorp and other purchasers sued the pipeline company and five gas producers under § 4 of the Clayton Act, alleging a conspiracy to inflate wholesale natural-gas prices and seeking treble damages for overcharges and reduced sales.
- Kansas and Missouri separately sued in the same federal court, asserting *parens patriae* claims on behalf of natural persons who bought gas from utilities at allegedly inflated retail prices, and also asserted claims for state and local governmental entities.
- Defendants argued the utilities suffered no actionable injury because regulatory tariffs required the utilities to pass wholesale costs through to retail customers.
- The district court rejected the pass-on defense as to the utilities but dismissed the States’ claims, holding that the utilities were direct purchasers with § 4 standing and retail consumers were indirect purchasers barred from recovery.
- The Tenth Circuit affirmed, and the Supreme Court granted review to determine who may sue under § 4 when a utility passes on the overcharge.

## Issues

1. Whether § 4 of the Clayton Act permits indirect purchasers (utility customers), represented by States as *parens patriae*, to recover treble damages when a regulated utility passes through the full amount of an unlawful overcharge.
2. Whether the direct-purchaser rule of *Hanover Shoe* and *Illinois Brick* should have an exception for regulated utilities where pass-through is allegedly complete and measurable.

## Decision

- The Supreme Court affirmed the judgment dismissing the States’ claims.
- The Court held that only the utility, as the direct purchaser from the alleged antitrust violators, has a cause of action for damages under § 4, even if it passes on the overcharge to its customers.
- The Court declined to create a regulated-utility exception to the indirect-purchaser bar.
- Justice Kennedy wrote the majority opinion; Justice White dissented, joined by Justices Brennan, Marshall, and Blackmun.

## Legal Principles

- Under § 4 of the Clayton Act, the direct purchaser from an antitrust violator is the proper plaintiff for treble-damages recovery; indirect purchasers generally may not recover for passed-through overcharges.
- The *Hanover Shoe* and *Illinois Brick* rules apply even in regulated industries where retail pricing is influenced by tariffs and rate regulation.
- Courts favor a clear rule because litigating pass-through and apportionment is complex, risks inconsistent outcomes, and can reduce private antitrust enforcement by diluting incentives and creating multiple-liability exposure.

## Conclusion

The Court held that the direct-purchaser rule governs regulated-utility markets: even if a utility passes an unlawful wholesale overcharge through to consumers, only the utility may seek federal treble damages under Clayton Act § 4, and States may not recover those overcharges for retail customers through *parens patriae* suits.


Kansas v. UtiliCorp United, Inc., 497 U.S. 199 (1990)