Academic journal article Washington and Lee Law Review

Restitution on Behalf of Indirect Purchasers: Opening the Backdoor to Illinois Brick

Academic journal article Washington and Lee Law Review

Restitution on Behalf of Indirect Purchasers: Opening the Backdoor to Illinois Brick

Article excerpt

But, this remedy was not selected.1

I. Introduction

In December 1998, the Federal Trade Commission (Commission) charged Mylan Laboratories (Mylan) with restraint of trade, monopolization, and conspiracy to monopolize the markets for two popular anti-anxiety drugs.2

The Commission alleged that illegal activity by Mylan enabled the company to raise the wholesale price of one of the drugs, Lorazepam, from $7.30 to $190.00 per bottle.3 The Commission accused the pharmaceuticals company of making excessive profits on drugs used to treat the elderly and the infirm.4 Attorneys General from nearly a dozen states announced that they too would join in the suit.5 They asserted both federal6 and pendant state claims.7

The Commission's action against Mylan seems unremarkable given the high number of antitrust enforcement actions in recent years. The front pages of major newspapers now frequently feature stories concerning the latest antitrust cases.8 These have included civil actions against Microsoft, Intel, American Airlines, and Visa and Mastercard.9 In addition, high-profile criminal prosecutions have led to the indictment of vitamin manufacturers engaged in an international cartel and the trial of executives at Archer Daniels Midland.10

The case against Mylan, however, was unique. The Federal Trade Commission sought $120 million in restitution11 and disgorgema12 of profits.13 According to the Commission, this was the amount by which Mylan profited from illegally overcharging for its drugs.14 The district court in FTC v. Mylan Laboratories, Inc.15 concluded that the Federal Trade Commission Act (FTC Act)16 gave the Commission authority to seek restitution and disgorgement of profits.17 This was the first time a court has permitted the Commission to seek such relief in an antitrust case.18

Moreover, the Commission sought to recover this money on behalf of indirect purchasers.19 Mylan sells the drugs it produces primarily to wholesalers and retail pharmacy chains, who in turn sell them to consumers.20 Thus, the consumers who bought the drugs for which Mylan overcharged were indirect purchasers. While the district court did not expressly permit the Commission to recover on behalf of indirect purchasers, it assumed that the Commission had authority to seek such relief.21

In Illinois Brick Co. v. Illinois,22 however, the Supreme Court held that indirect purchasers are not injured within the meaning of the federal antitrust laws.23 Thus, for over twenty years, Illinois Brick has barred indirect purchasers from recovering damages in antitrust cases.24 Now, by permitting the Commission to proceed with its claims for restitution, the court in Mylan appears to have opened a backdoor through which indirect purchasers may recover for antitrust violations. Opening this door risks giving rise to the very problems that the Supreme Court sought to avoid in Illinois Brick: multiple liability for defendants,25 complexity,26 and discouraging private antitrust suits. …

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