The House Monopolies Subcommittee yesterday approved a bill which would allow consumers, businesses and governments injured by antitrust violations to recover damages whether or not they have dealt directly with the antitrust violator.
The measure is intended to overturn a decision by the Supreme Court last year which held that only direct purchasers of a product may sue under the antitrust laws to collect the allowable treble damages.
The legislation has been given a high priority by the federal and state governments, which stand to lose millions of dollars in potential antitrust damages from pending cases that soon will be terminated unless the "corrective" legislation is forthcoming, according to John H. Shenefield, the assistant attorney general in charge of the Antitrust Division.
In many cases, the government contended they were injured because they purchased products - such as drugs for hospitals - at allegedly inflated prices because of a price-fixing conspiracy at the manufacturing level. But because they purchased the products from distributors, not directly from the manufacturers, they could not collect damages under the court decision.
The bill reported out yesterday would permit indirect purchasers, including the ultimate consumer, to recover from an antitrust violator if they could show to the satisfaction of a court that they were injured as a result of a violation.
In a letter to the subcommittee, Shenefield said damage actions by indirect purchasers are vital to effective and fair antitrust enforcement. Direct purchasers of products most often are middlemen - wholesalers that result from a price-fixing conspiracy and so have suffered no real injury.
Even if they did, Justice believes they lack the incentive to risk making their suppliers unhappy by suing them. That leaves consumers, in the injured but indirect purchasers, as the only available parties in many cases to sue for damages and show injury. But they currently have no remedy.
The bill provides that, in a class action seeking damages sustained by or passed on may be proven on a class-wide basis without requiring proof from each member of the class. But the violator would have to pay out only damages to those persons who make a "valid damage claim."
During the mark-up, the subcommittee voted 4 to 3 to adopt an amendment by Rep. Charles Wiggins (R-Calif.) which would overturn another recent Supreme Court decision by barring antitrust suits by foreign governments. A recent case held that foreign governments can sue companies doing business in the United States. Wiggins complained that there is no other country in the world where the U.S. has reciprocal rights.
Committee sources said the bill will be scheduled for mark-up by the full Judiciary Committee sometime this month. On the Senate side, the judiciary Committee agreed to vote on a similar measure no later than May 5 after a few more days of hearings.