Antitrust plaintiffs must be participants in the market that is directly restrained

In Illinois Brick Co. v. Illinois, the Supreme Court held that only companies or people that purchased goods or services directly from alleged antitrust violators may bring an action. “Indirect purchasers” – consumers or business entities downstream in the chain of distribution – lack standing under federal law. In Blue Shield of Virginia v. McCready, the Supreme Court made a narrow exception to the direct purchaser requirement that applies when a party’s injuries are “inextricably intertwined” with the injuries of market participants. McCready involved a patient who alleged that a health insurance provider and a group of psychiatrists colluded to exclude psychologists from receiving compensation under the health insurance plan, thereby harming the psychologists and their patients

 In re Aluminum Warehousing Antitrust Litigation, No. 14-3574 (2d Cir. Aug. 9, 2016) (Jacobs, J.) involved a complicated set of facts involving the aluminum market but a simple holding that reflects Illinois Brick, McCready and subsequent lower court case law: “to suffer antitrust injury, the putative plaintiff must be a participant in the very market that is directly restrained.” 

Usually, that market is the one in which the defendant operates, such as when the plaintiff is a competitor or consumer of the defendant, but sometimes the defendant will corrupt a separate market in order to achieve its illegal ends, in which case the injury suffered can be said to be “inextricably intertwined” with the injury of the ultimate target. Regardless, antitrust injury is suffered by participants in the restrained market (or markets).

At the center of Aluminum Warehousing are widely covered allegations that several investment banks and traders conspired to create delays in the loading aluminum out of certain warehouses in the Detroit Metro area. For example, in mid-2011, it took six months to get the metal out of the warehouses.  Two years later, the time had increased to more than sixteen months.

The Second Circuit held that purchasers of semi‐fabricated and fabricated aluminum do not have standing to assert an antitrust violation under these allegations because they do not participate in the market in which defendants operate and the injury they suffer (higher prices) is not “inextricably intertwined” with whatever injury the defendants intended to inflict.  “Unless the market dynamics force conspirators to corrupt a separate market to achieve their illegal ends, potential McCready plaintiffs do not arise.”