On May 13, 2019, the Supreme Court in
Apple v. Pepper, No. 17-204, held that iPhone app purchasers have standing to sue Apple for allegedly monopolizing the market for iPhone apps. A 5-4 justice majority affirmed the Ninth Circuit’s decision that iPhone owners can sue Apple for violations of federal antitrust laws, notwithstanding
Illinois Brick Co. v. Illinois’ ban on indirect purchaser suits. Apple had argued that iPhone users should be considered indirect purchasers because the prices the consumers pay are set by the app manufactures, not Apple, from whom they make the purchase. In allowing the claims against Apple to move past the pleading stage, the Court disclaimed overturning any part of the
Illinois Brick doctrine, as it concluded that the factual circumstances of
Apple v. Pepper fell squarely within the bright-line rule issued by the
Illinois Brick Court. This decision has the potential to significantly affect private antitrust enforcement in e-commerce and other markets with nontraditional sales channels by allowing the manufacturers of electronic platforms to be subject to antitrust suits even when they have not set the prices of the products sold in their markets. The impact of the decision on more traditional distribution channels remains an open question, and it will be interesting to see whether district courts show any more flexibility in allowing “indirect” suits in a more traditional supply-chain context.