Indirect-Purchaser Doctrine Law and Legal Definition

Indirect purchaser doctrine is a principle of antitrust law that provides that in litigation for price discrimination, the court will ignore sham middle parties in determining whether different prices were paid by different customers for the same goods. An antitrust action can be brought by a party who is not an immediate purchaser of a product. In short, indirect purchasers of goods or services are barred from recovering antitrust damages from antitrust violators.

The indirect purchaser rule is actually the product of two separate Supreme Court decisions that wrestle with the problems associated with a multiparty supply chain. The first allows a direct purchaser to recover the full amount of an illegal overcharge regardless of whether that cost is passed on to downstream buyers. [Hanover Shoe v. United Shoe Mach. Corp., 392 U.S. 481 (U.S. 1968)]. The second denies standing to downstream buyers regardless of how much of the overcharge was passed on to them.[ Ill. Brick Co. v. Ill., 431 U.S. 720 (U.S. 1977)]