The U.S. District Court in San Francisco next month is expected to approve the largest cash settlement for consumers in antitrust history.
In re TFT-LCD Antitrust Litigation (M:07-cv-01827) involves an international conspiracy to fix prices by manufacturers of flat panel (LCD) television, computer monitor and laptop screens. The case was brought on behalf of consumers in 24 states and the District of Columbia, but not on behalf of New Jersey residents who purchased LCD products during the class period. Unfortunately, they cannot participate in the $1.1 billion settlement.
In 1977, the U.S. Supreme Court decided Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). In that case, the court held that indirect purchasers — the consumers invariably injured by price fixing — could not recover under the antitrust laws. Rather, only direct purchasers (such as Apple, Dell, Best Buy, etc. in the TFT-LCD case) have standing under federal antitrust laws to recover in price-fixing cases even if they passed the overcharges on to their consumers and incurred no losses themselves.
The Supreme Court was concerned about the potential for multiple recoveries against defendants if both direct and indirect purchasers were permitted to sue, even though price fixing is a per se violation of the Sherman Act and a crime. Consequently, under Illinois Brick, consumers were left out in the cold, while direct purchasers who were not injured, and often were primarily concerned with maintaining beneficial relationships with their suppliers, frequently lacked the economic incentive to bring price-fixing cases themselves.
This obvious injustice to the actual victims of price fixing — the consumers — was sought to be rectified at the state level by many states that enacted “Illinois Brick Repealers” that gave indirect purchasers standing under state antitrust laws to sue for overcharges if they could show that overcharges were passed on to them. Consumers who will recover in the TFT-LCD case are from the 24 Illinois Brick repealer states and the District of Columbia, which do not include New Jersey.
In cases such as Wilson v. General Motors Corp., 190 N.J. 336 (2007), the New Jersey Supreme Court has construed New Jersey’s antitrust laws in conformance with the U.S. Supreme Court’s decisions interpreting the Sherman and Clayton Acts, including by adhering to the Illinois Brick decision.
Consequently, indirect purchasers lack standing to recover under New Jersey law in price-fixing cases. Although an Illinois Brick repealer bill was introduced in the state Senate by Sean Kean in March 2011, it did not advance and New Jersey consumers continue to have no recourse when they overpay as a result of criminal price-fixing conspiracies.
So, while many consumers from around the country will recover in the TFT-LCD case because they overpaid for televisions, computer monitors and laptops, many others will be left out in the cold. When virtually one-half the country’s consumers are unable to recover their damages, it can indeed be argued that crime does pay.
It is past time for New Jersey to jettison the Illinois Brick straightjacket in which its citizens find themselves and finally give indirect purchasers the right to sue for damages in price-fixing cases. It is the victims who should benefit from antitrust laws that are intended to foster competition and lower prices, not the criminals who violate them. •