Passing-On Defense And Indirect Purchaser Rule In Compensation Claims Arising From Competition Law

Introduction

An illegal price increase as a result of a competition law infringement primarily affects direct purchasers. Direct purchasers may then pass this increase on to their purchasers operating in sub-markets, namely, indirect purchasers. In such a case, the infringing undertakings that are subject to compensation claims may argue that direct purchasers have passed their damages on to indirect purchasers (passing-on defense); therefore, they are not harmed by the competition infringement. In this regard, indirect purchasers may wish to bring actions against the infringing undertakings, by claiming that the damage has been passed on to them. The discussions concerning the competition law doctrine with regard to the standing of indirect purchasers are known as the "indirect purchaser rule."