The US Debate on the Indirect Purchaser’s Claim to Damages in Competition Law Cases: Lessons for South Africa

Abstract

A debate that has dominated American competition law jurisprudence relates to whether indirect purchasers should be prevented from claiming damages in private enforcement cases or whether both direct and indirect purchasers should be given the opportunity to claim civil damages. While there may be practical considerations impacting the extent to which those who have been indirectly harmed by cartels can reasonably expect to claim damages, an overly restrictive approach that would only consider direct purchasers may mean that some who might have a valid claim are effectively denied access to justice. None of the courts in the bread price-fixing cases or other subsequent competition law damages cases in the South African courts dealt with the essential question, which is whether or not all participants in the supply chain, regardless of their role as end consumers (indirect purchasers) or purchasers of inputs (direct purchasers), should be allowed to sue an upstream cartel for damages? In this article I analyse the seminal cases which prompted this debate in the United States and, I argue that in South Africa, the implications of not allowing an indirect purchaser to claim damages has a negative impact on the end consumers’ case. I advocate for allowing both indirect and direct purchasers to claim damages, and for the defendant to raise a passing-on of the overcharge defence in response.