A consumer who buys from a distributor and then seeks to hold the manufacturer liable for overcharges resulting from a conspiracy is an indirect purchaser that lacks standing to recover damages under federal antitrust law. The Supreme Court created this indirect purchaser rule in Illinois Brick to avoid requiring courts to conduct complex pass-on damages analysis, to prevent duplicative recovery, and to allocate the right to sue to one group of buyers.

Illinois Brick did not address whether a consumer who buys from a distributor can hold a manufacturer liable for overcharges stemming from a conspiracy between the manufacturer and the distributor. Under a standard Illinois Brick analysis, these consumers would be indirect purchasers and could not recover damages, because only the distributor is a direct purchaser with standing to sue the manufacturer. But courts have carved out an exception to Illinois Brick, labeled the co-conspirator exception, which applies when a downstream consumer alleges a vertical conspiracy between a manufacturer and distributor. Under these circumstances, courts have held that Illinois Brick does not prevent the first non-conspiratorial purchaser in the chain of distribution from bringing suit against the manufacturer. There is disagreement, however, among the circuits regarding whether the co-conspirator exception to Illinois Brick is limited to just vertical price-fixing cases (the “narrow interpretation”), or whether the exception applies to any kind of vertical anticompetitive conduct (the “broad interpretation”), and the Supreme Court just last week declined to review a case that could have resolved the issue.

Rationales for the Narrow Interpretation