On November 20, 2019, the United States Court of Appeals for the Ninth Circuit affirmed summary judgment dismissing indirect purchaser plaintiffs’ claims that defendants, electronics manufacturers, conspired to fix the prices of optical disc drives (“ODD”) and computers with ODD. Indirect Purchaser Class v. Samsung Electronics Co. Ltd. et al., No. 1:18-cv-15058 (9th Cir. 2019). The Ninth Circuit rejected plaintiffs’ claims, because their economic expert’s analysis seeking to show that the fixed prices were passed on to consumers was not supported by the record evidence.
Plaintiffs, a class of retail consumers, alleged that defendants’ conspiracy slowed the decline of ODD prices and that the resulting inflated prices were passed on to retail consumers. For their claims to survive at the summary judgment stage, plaintiffs must show a genuine dispute of material fact, which includes a showing that plaintiffs suffered “antitrust injury . . . that flows from that which makes defendants’ acts unlawful.” In this case, plaintiffs were required to show that an inflated price was charged and passed on “at all levels of the distribution chain”—ultimately reaching and injuring the indirect purchaser class members. Plaintiffs attempted to raise a genuine dispute through economic expert testimony and documentary evidence showing that market participants (1) charged higher prices than they would have or (2) used lower quality components.
The Court found that plaintiff expert’s regression analysis showed only that the pass-through “could have occurred” in theory, but that the analysis was not sufficiently based on record evidence to show that higher, or passed on, prices “actually occurred.” Instead, the Court found that the documentary evidence identified by plaintiffs showed a competitive market. The Court also found that there was insufficient evidence that manufacturers used lower quality components than they would otherwise have used absent the alleged conspiracy.
This case illustrates that both plaintiffs and defendants in indirect purchaser antitrust suits should be aware of the likelihood of dismissal at the summary judgment stage regarding insufficient showings of causation and injury, particularly with regard to the “pass-through” issue. Despite the importance of expert economic analysis in antitrust cases, economic analysis cannot overcome record evidence if that evidence contradicts plaintiffs’ claims.