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KANSAS V. UTILICORP UNITED, 497 U. S. 199 (1990) - US SUPREME COURT DECISIONS ON-LINE
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KANSAS V. UTILICORP UNITED, 497 U. S. 199 (1990)
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Kansas v. Utilicorp United, Inc.
No. 88-2109
1. Three rationales underlie the indirect purchaser rule adopted in Hanover Shoe and Illinois Brick: (1) establishing the amount of an overcharge shifted to indirect purchasers would normally prove insurmountable in light of the wide range of considerations influencing a company's pricing decisions; (2) a pass-on defense would reduce the effectiveness of § 4 actions by diminishing the recovery available to any potential plaintiff; and (3) allowing suits by indirect purchasers would risk multiple liability chanroblesvirtualawlibrary
Page 497 U. S. 200
because the alleged antitrust violators could not use a pass-on defense in an action by the direct purchasers. Pp. 497 U. S. 206-208.
(c) Allowing indirect suits by utility customers would not better promote the goal of vigorous enforcement of the antitrust laws. Petitioners' argument that utilities lack incentives to sue overcharging suppliers is unpersuasive, since utilities may bring § 4 actions in some instances for fear that regulators will not allow them to shift known and avoidable overcharges on to their customers; since there is no authority indicating that utilities, which may have to pass on § 4 damages recovered, would also have to pay the entire exemplary portion of these damages to customers; and since utilities, in fact, have an established record chanroblesvirtualawlibrary
Page 497 U. S. 201
of diligent and successful antitrust enforcement. On the other hand, indirect purchaser actions might be ineffective because consumers may lack the expertise and experience necessary to detect improper pricing by a utility's suppliers, while state attorneys general may hesitate to exercise the parens patriae device in cases involving smaller, more speculative harm to consumers, and, in any event, may sue only on behalf of resident natural persons, leaving nonresidents and small businesses to fend for themselves. Pp. 497 U. S. 214-216.
KENNEDY, J., delivered the opinion of the Court, in which REHNQUIST, C.J.,and STEVENS, O'CONNOR, and SCALIA, JJ., joined. WHITE, J., filed a dissenting opinion, in which BRENNAN, MARSHALL, and BLACKMUN, JJ., joined, post, p. 497 U. S. 219. chanroblesvirtualawlibrary
Page 497 U. S. 203
Section 4 of the Clayton Act, 38 Stat. 731, as amended, 15 U.S.C. § 15, authorizes any person injured by a violation of chanroblesvirtualawlibrary
Page 497 U. S. 204
the antitrust laws to sue for treble damages, costs, and an attorney's fee. We must decide who may sue under § 4 when, in violation of the antitrust laws, suppliers overcharge a public utility for natural gas and the utility passes on the overcharge to its customers. Consistent with Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U. S. 481 (1968), and Illinois Brick, Co. v. Illinois, 431 U. S. 720 (1977), we hold that only the utility has the cause of action, because it alone has suffered injury within the meaning of § 4.
The petitioners, the States of Kansas and Missouri, initiated separate § 4 actions in the District Court against the same defendants for the alleged antitrust violation. Acting as parens patriae, the petitioners asserted the claims of all natural persons residing within Kansas and Missouri who had purchased gas from any utility at inflated prices. They also chanroblesvirtualawlibrary
Page 497 U. S. 205
In light of its ruling, the District Court chose to treat the partial summary judgment motion as a motion to dismiss the petitioners' parens patriae claims. It then granted this motion, but allowed the petitioners to take an interlocutory appeal under 28 U.S.C. § 1292(b). It certified the following question to the Court of Appeals:
"In a private antitrust action under 15 U.S.C. § 15 involving claims of price fixing against the producers of natural gas, is a State a proper plaintiff as parens patriae for its citizens who paid inflated prices for natural gas, when the lawsuit already includes as plaintiffs those public utilities who paid the inflated prices upon direct purchase from the producers and who subsequently passed on most or all of the price increase to the citizens
Page 497 U. S. 206
In Hanover Shoe, Inc. v. United Shoe Machinery Corp., supra, Hanover alleged that United had monopolized the shoe manufacturing machinery industry in violation of § 2 of the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. § 2. It sought treble damages under § 4 of the Clayton Act for overcharges paid in leasing certain machinery from United. United defended, in part, on the ground that Hanover had passed on the overcharge to its customers and, as a result, had suffered no injury. We rejected the defense for two reasons. First, noting that a wide range of considerations may influence a company's pricing decisions, we concluded that chanroblesvirtualawlibrary
Page 497 U. S. 207
establishing the amount of an overcharge shifted to indirect purchasers "would normally prove insurmountable." 392 U.S. at 392 U. S. 493. Second, we reasoned that a pass-on defense would reduce the effectiveness of § 4 actions by diminishing the recovery available to any potential plaintiff. See id. at 392 U. S. 494.
In Illinois Brick Co. v. Illinois, 431 U. S. 720 (1977), we applied these considerations to reach a similar result. The State of Illinois sued Illinois Brick and other concrete block manufacturers for conspiring to raise the cost of concrete blocks in violation of § 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. § 1. We ruled that the State had suffered no injury within the meaning of § 4 because Illinois Brick had not sold any concrete blocks to it. The company, instead, had sold the blocks to masonry subcontractors, who in turn had sold them to the State's general contractors. We decided that, because Illinois Brick could not use a pass-on defense in an action by direct purchasers, it would risk multiple liability to allow suits by indirect purchasers. See 431 U.S. at 431 U. S. 730-731. We declined to overrule Hanover Shoe or to create exceptions for any particular industries. See id. at 431 U. S. 735-736, 431 U. S. 744-745.
The petitioners ask us to allow them to press the consumers' claims for three reasons. First, they assert that none of the rationales underlying Hanover Shoe or Illinois Brick exist in cases involving regulated public utilities. Second, they argue that we should apply an exception, suggested in chanroblesvirtualawlibrary
Page 497 U. S. 208
Illinois Brick for actions based upon cost-plus contracts. Third, they maintain that § 4C of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 90 Stat. 1394-1396, as amended, 15 U.S.C. § 15c, authorizes them to assert claims on behalf of utility customers even if the customers could not assert any claims themselves. Affirming the Court of Appeals, we reject each of these contentions in turn.
The direct purchaser rule serves, in part, to eliminate the complications of apportioning overcharges between direct and indirect purchasers. See Hanover Shoe, supra, 392 U.S. at 392 U. S. 493; Illinois Brick, supra, 431 U.S. at 431 U. S. 740-742; Blue Shield of Virginia v. McCready, 457 U. S. 465, 457 U. S. 475, n. 11 (1982). The petitioners find the rule unnecessary, in this respect, when a utility passes on its costs to its customers pursuant to state regulations or tariffs filed with a utility commission. In such cases, they assert, the customers pay the entire overcharge, obviating litigation over its apportionment. They maintain that they can prove the exact injury to the residential customers whom they represent, because the respondent made periodic public filings showing the volume and price of gas that it sold to these consumers. They ask us to allow them to sue for chanroblesvirtualawlibrary
Page 497 U. S. 209
392 U.S. at 392 U. S. 493, n. 9. In other words, to show that a direct purchaser has borne no portion of an overcharge, the indirect purchaser would have to prove, among other things, that the direct purchaser could not have raised its rates prior to the overcharge.
In Hanover Shoe, however, we decided not to allow proof of what the direct purchaser might have done because of the "nearly insuperable difficulty" of the issue. Id. at 392 U. S. 493. The petitioners assume that the presence of state regulation would make the proof less difficult here. We disagree. The state regulation does not simplify the problem, but instead imports an additional level of complexity. To decide whether a utility has borne an overcharge, a court would have to consider not only the extent to which market conditions would have allowed the utility to raise its rates prior to the overcharge, as in the case of an unregulated business, but also what the state regulators would have allowed. In particular, chanroblesvirtualawlibrary
Page 497 U. S. 210
Second, difficult questions of timing might necessitate apportioning overcharges if we allowed indirect suits by utility customers. Even if, at some point, a utility can pass on 100 percent of its costs to its customers, various factors may delay the passing-on process. Some utilities must seek approval from the governing regulators prior to raising their rates. Other utilities, pursuant to Purchase Gas Adjustment clauses (PGAs) filed with state regulators, may adjust their rates to reflect changes in their wholesale costs according to prearranged formulas without seeking regulatory approval in chanroblesvirtualawlibrary
Page 497 U. S. 211
each instance. Yet even utilities that use PGAs often encounter some delay. See Brief for State of Illinois as Amicus Curiae 9, n. 11 (describing the various time-lags under a typical PGA between the increase in a utility's wholesale costs and the rise in consumer rates). During any period in which a utility's costs rise before it may adjust its rates, the utility will bear the costs in the form of lower earnings. See S. Breyer, Regulation and its Reform 48-49 (1982). Even after the utility raises its rates, moreover, the pass-through process may take time to complete. During this time, the utility and its customers each would pay for some of the increased costs.
"the task of disentangling overlapping damages claims is not lightly to be imposed upon potential antitrust litigants, or upon the judicial system."
McCready, 457 U.S. at 457 U. S. 475, n. 11.
In addition to these complications, the regulation of utilities itself may make an exception to Illinois Brick unnecessary. Our decisions in Hanover Shoe and Illinois Brick often deny relief to consumers who have paid inflated prices chanroblesvirtualawlibrary
Page 497 U. S. 212
because of their status as indirect purchasers. See 2 P. Areeda & D. Turner, Antitrust Law § 337e, pp. 193-194 (1978); Harris & Sullivan, Passing on the Monopoly Overcharge: A Comprehensive Policy Analysis, 128 U.Pa.L.Rev. 269, 342 (1979). Although one might criticize Illinois Brick for this consequence in other circumstances, the criticism may have less validity in the context of public utilities. Both the Court of Appeals in this case and the Seventh Circuit in Illinois ex rel. Hartigan v. Panhandle Eastern Pipeline Co., 852 F.2d 891 (CA7 1988), have suggested that state regulators would require the utilities to pass on at least some of the recovery obtained in a § 4 suit. See Wyoming Tight Sands, 866 F.2d 1291; Panhandle Eastern, supra, at 895. State regulators have followed this approach elsewhere. See, e.g., In re: Petition of LP & L for Order Relating to Disposition of Proceeds Against Gas Supplier, 1989 La. PUC LEXIS 3, 31-32 (Nos. U-17906, U-12636, and U-17649) (requiring Louisiana Power & Light Co., which won a $190 million judgment against United Gas Pipe Line Co., to flow the proceeds back to ratepayers through reduced rates over a 5-year period). If Kansas and Missouri impose similar requirements, then, even if the customers cannot sue the alleged antitrust violators, they may receive some of the compensation obtained by the respondent. Creating an exception to allow apportionment in violation of Illinois Brick would make little sense when, in light of all its difficulty, its practical significance is so diminished.
The Illinois Brick rule also serves to eliminate multiple recoveries. See Illinois Brick, 431 U.S. at 431 U. S. 730-731; McCready, supra, 457 U.S. at 457 U. S. 474. The petitioners assert that no risk of multiple recovery would exist here if we allowed them to sue, because the direct and indirect purchasers would be seeking different, not duplicative, damages; the petitioners would recover the amount of the overcharge and the utilities would recover damages for their lost sales. Leaving chanroblesvirtualawlibrary
Page 497 U. S. 213
aside the apportionment issue, we reject the argument in this case, just as we did in Illinois Brick. Bringing all classes of direct and indirect purchasers together in a single lawsuit may reduce the risk of multiple recovery, but the reduction comes at too great a cost. See Illinois Brick, supra, 431 U.S. at 431 U. S. 731 n. 11.
"even if ways could be found to bring all potential plaintiffs together in one huge action, the complexity thereby introduced into treble-damages proceedings argues strongly for retaining the Hanover Shoe rule."
431 U.S. at 431 U. S. 731, n. 11. chanroblesvirtualawlibrary
Page 497 U. S. 214
We have maintained throughout our cases that our interpretation of § 4 must promote the vigorous enforcement of the antitrust laws. See Hanover Shoe, 392 U.S. at 392 U. S. 493; Illinois Brick supra, 431 U.S. at 431 U. S. 746; McCready, supra, 457 U.S. at 457 U. S. 475, n. 11; California v. ARC America Corp., 490 U. S. 93, 490 U. S. 102, n. 6 (1989). If we were convinced that indirect suits would secure this goal better in cases involving utilities, the argument to interpret § 4 to create the exception sought by the petitioners might be stronger. On balance, however, we do not believe that the petitioners can prevail in this critical part of the case. The petitioners assert that utilities, such as the respondent, lack the incentive to prosecute § 4 cases for two reasons. First, they state that utilities, by law, may pass on their costs to customers. Second, they surmise that utilities might have to pass on damages recovered in a § 4 action. In other words, according to the petitioners, utilities lose nothing if they do not sue, and gain nothing if they do sue. In contrast, the petitioners maintain, the large aggregate claims of residential consumers will give state attorneys general ample motivation to sue in their capacity as parens patriae.
The petitioners' argument does not persuade us that utilities will lack incentives to sue overcharging suppliers. Utilities may bring § 4 actions in some instances for fear that regulators will not allow them to shift known and avoidable overcharges on to their customers. See Kan.Stat.Ann. § 66-128a (1985) (allowing the state commission to "review and evaluate the efficiency or prudence of any actions . . . of any public utility or common carrier for the purpose of establishing fair and reasonable rates"); Mo.Rev.Stat. § 393.150 (1986) (interpreted in State ex rel. Associated Natural Gas Co. v. Public Service Comm'n, 706 S.W.2d 870, 879-880 (Mo.App.1985), to give regulators "considerable discretion" in setting gas rates). In addition, even if state law would require a utility to reimburse its customers for recovered overcharges, a utility may seek treble damages in a § 4 action. chanroblesvirtualawlibrary
Page 497 U. S. 215
"a series of horizontal price-fixing conspiracies characterized as the most shocking in the history of the Sherman Act, plaintiff utilities . . . recover[ed] in unprecedented sums"
Relying on indirect purchaser actions in utility cases might fail to promote antitrust enforcement for other reasons. Consumers may lack the expertise and experience necessary for detecting improper pricing by a utility's suppliers. See Landes & Posner, The Economics of Passing On: A Reply to Harris and Sullivan, 128 U.Pa.L.Rev. 1274, 1278-1279 (1980). Although state attorneys general have greater expertise, chanroblesvirtualawlibrary
Page 497 U. S. 216
they may hesitate to exercise the parens patriae device in cases involving smaller, more speculative harm to consumers. See Landes & Posner, Should Indirect Purchasers Have Standing to Sue Under the Antitrust Laws? An Economic Analysis of the Rule of Illinois Brick 46 U.Chi.L.Rev. 602, 613 (1979). See also Illinois Brick, 431 U.S. at 431 U. S. 745 (stating that, in indirect actions, "the uncertainty of how much of an overcharge could be established . . . [and] the uncertainty of how that overcharge would be apportioned . . . would further reduce the incentive to sue"). And even when state attorneys general decide to bring parens patriae actions, they may sue only on behalf of resident natural persons. See 15 U.S.C. § 15c(a)(1). All others, including nonresidents and small businesses, might fail to enforce their claims because of the insignificance of their individual recoveries. For these reasons, we remain unconvinced that the exception sought by the petitioners would promote antitrust enforcement better than the current Illinois Brick rule.
The preceding conclusions bring us to a broader point. The rationales underlying Hanover Shoe and Illinois Brick will not apply with equal force in all cases. We nonetheless believe that ample justification exists for our stated decision not to "carve out exceptions to the [direct purchaser] rule for particular types of markets." Illinois Brick, 431 U.S. at 431 U. S. 744. The possibility of allowing an exception, even in rather meritorious circumstances, would undermine the rule. As we have stated:
"[T]he process of classifying various market situations according to the amount of pass-on likely to be involved and its susceptibility of proof in a judicial forum would entail the very problems that the Hanover Shoe rule was meant to avoid. The litigation over where the line should be drawn in a particular class of cases would inject the same 'massive evidence and complicated theories'
Page 497 U. S. 217
into treble-damages proceedings, albeit at a somewhat higher level of generality."
Id. at 431 U. S. 744-745. In sum, even assuming that any economic assumptions underlying the Illinois Brick rule might be disproved in a specific case, we think it an unwarranted and counterproductive exercise to litigate a series of exceptions. Having stated the rule in Hanover Shoe, and adhered to it in Illinois Brick, we stand by our interpretation of § 4.
"We recognize that there might be situations -- for instance, when an overcharged buyer has a preexisting 'cost-plus' contract, thus making it easy to prove that he has not been damaged -- where the considerations requiring that the passing-on defense not be permitted in this case would not be present."
392 U.S. at 392 U. S. 494. We observed further in Illinois Brick:
"In [a cost-plus contract] situation, the [direct] purchaser is insulated from any decrease in its sales as a result of attempting to pass on the overcharge because its customer is committed to buying a fixed quantity regardless of price. The effect of the overcharge is essentially determined in advance, without reference to the interaction of supply and demand that complicates the determination in the general case."
431 U.S. at 431 U. S. 736. The petitioners argue that the regulations and tariffs requiring the respondent to pass on its costs to the consumers place this case within the cost-plus contract exception. We disagree. chanroblesvirtualawlibrary
Page 497 U. S. 218
The utility customers made no commitment to purchase any particular quantity of gas, and the utility itself had no guarantee of any particular profit. Even though the respondent raised its prices to cover its costs, we cannot ascertain its precise injury because, as noted above, we do not know what might have happened in the absence of an overcharge. In addition, even if the utility customers had a highly inelastic demand for natural gas, see Panhandle Eastern, 852 F.2d 895, the need to inquire into the precise operation of market forces would negate the simplicity and certainty that could justify a cost-plus contract exception. See Illinois Brick, supra, 431 U.S. at 742; P. Areeda & H. Hovencamp, Antitrust Law § 337.3c, pp. 323-324 (Supp.1988). Thus, although we do not alter our observations about the possibility of an exception for cost-plus contracts, we decline to create the general exception for utilities sought by the petitioners.
"Any attorney general of a State may bring a civil action in the name of such state as parens patriae on behalf of natural persons residing in such State . . . to secure monetary relief as provided in this section for injury sustained
Page 497 U. S. 219
by such natural persons to their property by reason of any violation of sections 1 to 7 of this title."
"[i]t simply created a new procedural device -- parens patriae actions by States on behalf of their citizens -- to enforce existing rights of recovery under § 4 [of the Clayton Act.]"
431 U.S. at 431 U. S. 734, n. 14. Section 4, as noted above, affords relief only to a person "injured in his business or property by reason of anything forbidden in the antitrust laws." 15 U.S.C. § 15(a). State attorneys general may bring actions on behalf of consumers who have such an injury. See, e.g., Pennsylvania v. Mid-Atlantic Toyota Distributors, Inc., 704 F.2d 125, 128 (CA4 1983) (suit on behalf of consumers injured by an alleged conspiracy to fix the price of cars). But here the respondent is the injured party under the antitrust laws, and the predicate for a parens patriae action has not been established. We conclude that the petitioners may not assert any claims on behalf of the customers.
I dissent from the Court's opinion and judgment because it is inappropriate for the Court to deny standing to sue under § 4 of the Clayton Act, 15 U.S.C. § 15, to customers of a regulated utility in circumstances such as those presented in this case. By its plain language, § 4 reflects an "expansive remedial chanroblesvirtualawlibrary
Page 497 U. S. 220
purpose.'" Blue Shield of Virginia v. McCready, 457 U. S. 465, 457 U. S. 472 (1982) (citation omitted). It does not distinguish between classes of customers, but rather grants a cause of action to "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws. . . ." 15 U.S.C. § 15(a). In enacting § 4, Congress sought to ensure that victims of anticompetitive conduct receive compensation. Blue Shield, supra, at 472; Pfizer, Inc. v. India, 434 U. S. 308, 434 U. S. 314 (1978).
In Illinois Brick Co. v. Illinois, 431 U. S. 720 (1977), we held that certain indirect purchasers of concrete block lacked standing to challenge the manufacturer's business practices under the antitrust laws because they could not be deemed to have suffered injury from the alleged illegal conduct. This suit, however, is very different from Illinois Brick. That case involved a competitive market where concrete block manufacturers sold to masonry contractors who, in turn, sold to general contractors, who, in turn, sold to the Illinois Brick respondents; this case involves a highly regulated market where utilities possessing natural monopolies purchase gas from natural gas suppliers and then sell the gas to residential customers. Illinois Brick did not hold that, in all circumstances, indirect purchasers lack § 4 standing. Indeed, just last Term we observed that, under Illinois Brick,
"indirect purchasers might be allowed to bring suit in cases in which it would be easy to prove the extent to which the overcharge was passed on to them."
California v. ARC America Corp., 490 U. S. 93, 490 U. S. 102, and n. 6 (1989). See also Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U. S. 481, 392 U. S. 494 (1968).
The issue in this case is whether Illinois Brick bars a suit by retail customers to whom the utilities have passed on the entire cost of the gas sold to them, including any illegal overcharge. Before the District Court, the utilities moved to dismiss the States as parens patriae, arguing that the States lacked standing because they represented indirect purchasers. chanroblesvirtualawlibrary
Page 497 U. S. 221
In response, the States contended that the indirect purchasers were proper plaintiffs because the utilities had passed through the entire overcharge to their residential customers. The District Court found it unnecessary "to wait upon evidence establishing the degree to which the utilities passed on the overcharge," In re Wyoming Tight Sands Antitrust Cases, 695 F.Supp. 1109, 1116 (Kan. 1988), for, even accepting the State's position that there had been a total pass-on, decisions of this Court were thought to bar the suit. Likewise, in affirming the District Court, the Court of Appeals presumed a "perfect and provable pass-on of the allegedly illegal overcharge." In re Wyoming Tight Sands Antitrust Cases, 866 F.2d 1286, 1293 (CA10 1989). Indeed, the Vice President and General Counsel of one of the respondent utilities is on record as stating that the utility's customers "pay all of any increases in the cost of natural gas [Kansas Power & Light] must purchase to serve them." Affidavit of David S. Black, Vice President and General Counsel of the Kansas Power & Light Company, Record, Doc. No. 485, Exhibit D (emphasis in original). Rather than embarking, as the Court does, on what amounts to a factfinding mission, which the courts below eschewed, about the fact and probability of this pass-on, we should decide this case on the basis that there has been a complete pass-through of the overcharge. On that basis, it is evident that the concerns underlying the decision in Illinois Brick do not support the judgment below. Rather, we should follow the plain intent of § 4 that the victims of anticompetitive conduct be allowed the remedy provided by the section.
Illinois Brick barred indirect purchaser suits chiefly because we feared that permitting the use of pass-on theories under § 4 would transform these treble-damages actions into massive and inconclusive efforts to apportion the recovery among all potential plaintiffs that could have absorbed part of the overcharge -- from direct purchasers to middlemen to ultimate consumers. 431 U.S. at 431 U. S. 737. As Judge Posner has chanroblesvirtualawlibrary
Page 497 U. S. 222
"[t]he optimal adjustment by an unregulated firm to the increased cost of the input will always be a price increase smaller than the increase in input cost, and this means that the increased cost will be divided between the two tiers, the direct and the indirect purchasers -- but in what proportion will often be hard to determine, even by sophisticated techniques of economic analysis. This is a central insight of the Illinois Brick decision."
Illinois ex rel. Hartigan v. Panhandle Eastern Pipe Line Co., 852 F.2d 891, 894 (CA7 1988).
Of course, to recover in a case like this, the plaintiff must prove that the utility paid the pipelines an illegally high price, and must demonstrate the amount of the overcharge. That amount is included in the rates charged by the utility, and hence is passed through to the consumer. The result is that determining the injury inflicted on consumers involves nothing more than reading their utility bills, which reveal the amount of gas purchased by them at a price which includes the amount of the illegal overcharge passed through to them. Where it is clear that the entire overcharge is passed through, there can be no claim that indirect purchasers cannot chanroblesvirtualawlibrary
Page 497 U. S. 223
The Court contends that the apportionment problem is not so simple. It maintains that, even where a utility raises its rates to compensate for the overcharge and passes the overcharge through to the indirect purchasers, an apportionment problem still exists because
"to show that a direct purchaser has borne no portion of an overcharge, the indirect purchaser would have to prove, among other things, that the direct purchaser could not have raised its rates prior to the overcharge."
Ante at 497 U. S. 209. The problem identified by the majority is not peculiar to indirect purchaser suits. In antitrust cases where suppliers increase their prices, courts frequently must separate the price increase attributable to anticompetitive conduct (i.e., the "overcharge") from the price increase attributable to legitimate factors. This type of calculation
"has to be done in every case where the plaintiff claims to have lost sales because of the defendant's unlawful conduct and the defendant argues that the loss was due partly or entirely to other factors."
Panhandle Eastern, supra, at 897; see Bigelow v. RKO Radio Pictures, Inc., 327 U. S. 251 (1946). The problem identified in Illinois Brick was entirely different: there we were concerned that it would unduly complicate litigation to require courts to separate the portion of the overcharge absorbed by the direct purchaser from the portion of the overcharge passed onto the indirect purchaser. As argued above, this difficulty is not a concern in the present case. 497 U. S. S. 224� in position to secure a rate increase on grounds having nothing to do with the price paid for its gas would fail to request a rate increase that included, as well, the entire amount paid for gas purchased from pipelines and sold to consumers.
Illinois Brick also observed that granting standing to the indirect purchasers in that case would lead to the under-enforcement of the antitrust laws. 431 U.S. at 431 U. S. 745-747. In the cases where there is "a perfect and provable pass-through," however, the opposite is true for two reasons. First, because the pass-through of the overcharge is complete and easily demonstrated, the indirect purchasers -- and the States in their parens patriae capacity -- may readily discover their injury. Second, although the utility could sue to recover lost profits resulting from lost sales due to the illegally high price, its injury is not measured by the amount of the illegal overcharge that it has passed on, and hence the utility would have no incentive to seek such a recovery.
A third consideration prompting our decision in Illinois Brick was our belief that permitting indirect purchaser suits might subject antitrust defendants to multiple liability. 431 U.S. at 431 U. S. 730-731. Again however, where there is a "perfect and provable" pass-through, there is no danger that both the utilities and the indirect purchasers will recover damages for the same anticompetitive conduct, because the utilities chanroblesvirtualawlibrary
Page 497 U. S. 225
The majority argues that, even "[l]eaving aside the apportionment issue" (i.e., assuming that there is no apportionment difficulty, as the Tenth Circuit did in affirming summary judgment), the multiple recovery problem identified in Illinois Brick still exists. Ante at 497 U. S. 212-213. I disagree. Illinois Brick
"focused on the risk of duplicative recovery engendered by allowing every person along a chain of distribution to claim damages arising from a single transaction that violated the antitrust laws."
Blue Shield, 457 U.S. at 457 U. S. 474-475. The danger of multiple recoveries does not exist aside from the apportionment difficulty; rather, it stems from it. If only defensive use of a pass-through defense were barred, or if it were extremely difficult to ascertain the percentage of an overcharge that the utility passed through, then the supplier of natural gas might potentially have to pay overlapping damages to successive purchasers at different levels in the distribution chain. But where there is no apportionment difficulty, there is no comparable risk.
None of the concerns that caused us to bar the indirect purchaser's suit in Illinois Brick exist in this case. For that chanroblesvirtualawlibrary
Page 497 U. S. 226
reason, rather than extending the Illinois Brick exception to § 4's grant of a cause of action to persons injured through anticompetitive conduct, I would hold that the petitioners in this case have standing to sue. This result would promote the twin antitrust goals of ensuring recompense for injured parties and encouraging the diligent prosecution of antitrust claims.
"difficult problems of timing might necessitate apportioning overcharges if we allowed indirect suits by utility customers. Even if, at some point, a utility can pass on 100 percent of its costs to its customers, various factors may delay the passing on process."
Ante at 497 U. S. 210. This suggestion, as suggested by the words "might" and "may," is quite speculative. It is much more realistic to believe that, sooner or later, the customer will foot the cost of overpriced gas. If timing was such a problem, the Tenth Circuit would not have assumed a "perfect and provable" pass-through.