Edward H. Hatton argued the cause for petitioners. With him on the briefs were Lynne E. McNown, Alan L. Metz, Samuel J. Betar, Earl E. Pollack, James P. Morgan, Thomas W. Johnston, and George B. Collins.

Lee A. Freeman, Jr., Special Assistant Attorney General of Illinois, argued the cause for respondents. With him on the brief was William J. Scott, Attorney General.

Assistant Attorney General Baker argued the cause for the United States as amicus curiae urging affirmance. With him on the brief were Acting Solicitor General Friedman and Carl D. Lawson.*

*Evelle J. Younger, Attorney General, Sanford N. Gruskin, Chief Assistant Attorney General, Warren J. Abbott, Assistant Attorney General, and Michael I. Spiegel and Richard N. Light, Deputy Attorneys General, filed a brief for the State of California as amicus curiae urging affirmance.

A brief of amici curiae urging affirmance was filed by the Attorneys General and other officials for their respective States as follows: Bruce E. Babbitt, Attorney General, John A. Baade, Assistant Attorney General, and Kenneth R. Reed, of Arizona; William J. Baxley, Attorney General, and William T. Stephens, Assistant Attorney General, of Alabama; Avrum M. Gross, Attorney General, and Joseph K. Donohue, Assistant Attorney General, of Alaska; Bill Clinton, Attorney General, and Frank B. Newell, Deputy Attorney General, of Arkansas; J. D. MacFarlane, Attorney General, and Robert F. Hill, First Assistant Attorney General, of Colorado; Carl R. Ajello, Attorney General, and Gerard J. Dowling and Larry H. Evans, Assistant Attorneys General, of Connecticut; Richard R. Wier, Jr., Attorney General, and Regina M. Small, Deputy Attorney General, of Delaware; Robert L. Shevin, Attorney General, and Charles R. Ranson, Assistant Attorney General, of Florida; Arthur K. Bolton, Attorney General, and R. Douglas Lackey, Assistant Attorney General, of Georgia; Ronald Y. Amemiya, Attorney General, and Nelson S. W. Chang, Deputy Attorney General, of Hawaii; Wayne L. Kidwell, Attorney General, and Rudolf D. Barchas, Deputy Attorney General, of Idaho; Theodore L. Sendak, Attorney General, and Donald P. Bogard, of Indiana; Richard C. Turner, Attorney General, and Gary H. Swanson, Assistant Attorney General, of Iowa; Curt T. Schneider, Attorney General, and Thomas H. Brill, Assistant Attorney General, of Kansas; Robert F. Stephens, Attorney General, and W. Patrick Stallard, Assistant Attorney General, of Kentucky; William J. Guste, Jr., Attorney General, and John R. Flowers, Jr., Assistant Attorney General, of Louisiana; Joseph E. Brennan, Attorney General, and Cheryl Harrington, Assistant Attorney General, of Maine; Francis B. Burch, Attorney General, and Thomas M. Wilson III, Assistant Attorney General, of Maryland; Francis X. Bellotti, Attorney General, and Paula W. Gold, Assistant Attorney General, of Massachusetts; Frank J. Kelley, Attorney General, and Edwin M. Bladen, Assistant Attorney General, of Michigan; Warren R. Spannaus, Attorney General, and Alan H. Maclin, Special Assistant Attorney General, of Minnesota; A. F. Summer, Attorney General, and Donald Clark, Jr., Special Assistant Attorney General, of Mississippi; John Ashcroft, Attorney General of Missouri; Michael T. Greely, Attorney General, and Mike McGrath, Assistant Attorney General, of Montana; Paul L. Douglas, Attorney General, and Robert F. Bartle, Assistant Attorney General, of Nebraska; Robert List, Attorney General, and Donald Klasic, Deputy Attorney General, of Nevada; David H. Souter, Attorney General, and Wilfred John Funk, Assistant Attorney General, of New Hampshire; William F. Hyland, Attorney General, and Elias Abelson, of New Jersey; Toney Anaya, Attorney General, and Robert N. Hilgendorf, Assistant Attorney General, of New Mexico; Louis J. Lefkowitz, Attorney General, and John M. Desiderio, Assistant Attorney General, of New York; Rufus L. Edmisten, Attorney General, and G. Jona Poe, Jr., Special Deputy Attorney General, of North Carolina; Allen I. Olson, Attorney General, and Lynn E. Erickson, Assistant Attorney General, of North Dakota; Larry Derryberry, Attorney General, and Paul C. Duncan, Assistant Attorney General, of Oklahoma; James A. Redden, Attorney General of Oregon; Robert P. Kane, Attorney General, and Vincent X. Yakowicz, Solicitor General, of Pennsylvania; Julius C. Michaelson, Attorney General of Rhode Island; Daniel R. McLeod, Attorney General, and Victor S. Evans, Deputy Attorney General, of South Carolina; William J. Janklow, Attorney General, and Thomas J. Welk, Assistant Attorney General, of South Dakota; Brooks McLemore, Attorney General of Tennessee; John L. Hill, Attorney General, and Lee C. Clyburn, of Texas; Robert B. Hansen, Attorney General, and William T. Evans, Assistant Attorney General, of Utah; M. Jerome Diamond, Attorney General, and Jay I. Ashman, Assistant Attorney General, of Vermont; Anthony F. Troy, Chief Deputy Attorney General, and John J. Miles, Assistant Attorney General, of Virginia; Slade Gorton, Attorney General, and Thomas L. Boeder, Assistant Attorney General, of Washington; Chauncey H. Browning, Jr., Attorney General, and Gene Hal Williams, Deputy Attorney General, of West Virginia; Bronson C. LaFollette, Attorney General, and Michael L. Zaleski, Assistant Attorney General, of Wisconsin; V. Frank Mendicino, Attorney General, Charles J. Carroll, Deputy Attorney General, and Jim Gusea, Assistant Attorney General, of Wyoming.

MR. JUSTICE WHITE delivered the opinion of the Court.

Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U. S. 481 (1968), involved an antitrust treble-damages action brought under § 4 of the Clayton Act¹ against a manufacturer of shoe machinery by one of its customers, a manufacturer of shoes. In defense, the shoe machinery manufacturer sought to show that the plaintiff had not been injured in its business as required by § 4 because it had passed on the claimed illegal overcharge to those who bought shoes from it. Under the defendant‘s theory, the illegal overcharge was absorbed by the plaintiff‘s customers—indirect purchasers of the defendant‘s shoe machinery—who were the persons actually injured by the antitrust violation.

In

Hanover Shoe this Court rejected as a matter of law this defense that indirect rather than direct purchasers were the parties injured by the antitrust violation. The Court held that, except in certain limited circumstances,² a direct purchaser suing for treble damages under § 4 of the Clayton Act is injured within the meaning of § 4 by the full amount of the overcharge paid by it and that the antitrust defendant is

not permitted to introduce evidence that indirect purchasers were in fact injured by the illegal overcharge.

392 U. S., at 494. The first reason for the Court‘s rejection of this offer of proof was an unwillingness to complicate treble-damages actions with attempts to trace the effects of the overcharge on the purchaser‘s prices, sales, costs, and profits, and of showing that these variables would have behaved differently without the overcharge.

Id., at 492-493.³ A second reason for barring the pass-on defense was the Court‘s concern that unless direct purchasers were allowed to sue for the portion of the overcharge arguably passed on to indirect purchasers, antitrust violators “would retain the fruits of their illegality”

because indirect purchasers “would have only a tiny stake in the lawsuit” and hence little incentive to sue.

Id., at 494.

In this case we once again confront the question whether the overcharged direct purchaser should be deemed for purposes of § 4 to have suffered the full injury from the overcharge; but the issue is presented in the context of a suit in which the plaintiff, an indirect purchaser, seeks to show its injury by establishing pass-on by the direct purchaser and in which the antitrust defendants rely on

Hanover Shoe‘s rejection of the pass-on theory. Having decided that in general a pass-on theory may not be used defensively by an antitrust violator against a direct purchaser plaintiff, we must now decide whether that theory may be used offensively by an indirect purchaser plaintiff against an alleged violator.

I

Petitioners manufacture and distribute concrete block in the Greater Chicago area. They sell the block primarily to masonry contractors, who submit bids to general contractors for the masonry portions of construction projects. The general contractors in turn submit bids for these projects to customers such as the respondents in this case, the State of Illinois and 700 local governmental entities in the Greater Chicago area, including counties, municipalities, housing authorities, and school districts. See

67 F. R. D. 461, 463 (ND Ill. 1975); App. 16-48. Respondents are thus indirect purchasers of concrete block, which passes through two separate levels in the chain of distribution before reaching respondents. The block is purchased directly from petitioners by masonry contractors and used by them to build masonry structures; those structures are incorporated into entire buildings by general contractors and sold to respondents.

Respondent State of Illinois, on behalf of itself and respondent local governmental entities, brought this antitrust trebledamages action under § 4 of the Clayton Act, alleging that petitioners had engaged in a combination and conspiracy to fix the prices of concrete block in violation of § 1 of the Sherman Act.⁴ The complaint alleged that the amounts paid by respondents for concrete block were more than $3 million higher by reason of this price-fixing conspiracy. The only way in which the antitrust violation alleged could have injured respondents is if all or part of the overcharge was passed on by the masonry and general contractors to respondents, rather than being absorbed at the first two levels of distribution. See

Illinois v. Ampress Brick Co., 536 F. 2d 1163, 1164 (CA7 1976).⁵

Petitioner manufacturers moved for partial summary judgment against all plaintiffs that were indirect purchasers of concrete block from petitioners, contending that as a matter of law only direct purchasers could sue for the alleged overcharge.⁶ The District Court granted petitioners’ motion, but the Court of Appeals reversed, holding that indirect purchasers such as respondents in this case can recover treble damages for an illegal overcharge if they can prove that the overcharge

was passed on to them through intervening links in the distribution chain.⁷

We granted certiorari,

429 U. S. 938 (1976), to resolve a conflict among the Courts of Appeals⁸ on the question whether the offensive use of pass-on authorized by the decision below is consistent with

Hanover Shoe‘s restrictions on the defensive use of pass-on. We hold that it is not, and we reverse. We reach this result in two steps. First, we conclude that whatever rule is to be adopted regarding pass-on in antitrust damages actions, it must apply equally to plaintiffs and defendants. Because

Hanover Shoe would bar petitioners from using respondents’ pass-on theory as a defense to a treble-damages suit

by the direct purchasers (the masonry contractors),⁹ we are faced with the choice of overruling (or narrowly limiting)

Hanover Shoe or of applying it to bar respondents’ attempt to use this pass-on theory offensively. Second, we decline to abandon the construction given § 4 in

Hanover Shoe—that the overcharged direct purchaser, and not others in the chain of manufacture or distribution, is the party “injured in his business or property” within the meaning of the section—in the absence of a convincing demonstration that the Court was wrong in

Hanover Shoe to think that the effectiveness of the antitrust treble-damages action would be substantially reduced by adopting a rule that any party in the chain may sue to recover the fraction of the overcharge allegedly absorbed by it.

II

The parties in this case agree that however § 4 is construed with respect to the pass-on issue, the rule should apply equally to plaintiffs and defendants—that an indirect purchaser should not be allowed to use a pass-on theory to recover damages from a defendant unless the defendant would be allowed to use a pass-on defense in a suit by a direct purchaser. Respondents, in arguing that they should be allowed to recover by showing pass-on in this case, have conceded that petitioners should be allowed to assert a pass-on defense against direct purchasers of concrete block, Tr. of Oral Arg. 33, 48; they ask this Court to limit

Hanover Shoe‘s bar on pass-on defenses to its “particular factual context” of overcharges for capital goods used to manufacture new products.

Id., at 41; see

id., at 36, 47-48.

Before turning to this request to limit

Hanover Shoe, we consider the substantially contrary position, adopted by our dissenting Brethren, by the United States as amicus curiae, and by lower courts that have allowed offensive use of pass-on, that the unavailability of a pass-on theory to a defendant

should not necessarily preclude its use by plaintiffs seeking treble damages against that defendant.¹⁰ Under this view,

Hanover Shoe‘s rejection of pass-on would continue to apply to defendants unless direct and indirect purchasers were both suing the defendant in the same action; but it would not bar indirect purchasers from attempting to show that the overcharge had been passed on to them. We reject this position for two reasons.

First, allowing offensive but not defensive use of pass-on would create a serious risk of multiple liability for defendants. Even though an indirect purchaser had already recovered for all or part of an overcharge passed on to it, the direct purchaser would still recover automatically the full amount of the overcharge that the indirect purchaser had shown to be passed on; similarly, following an automatic recovery of the full overcharge by the direct purchaser, the indirect purchaser could sue to recover the same amount. The risk of duplicative recoveries created by unequal application of the

Hanover Shoe rule is much more substantial than in the more usual situation where the defendant is sued in two different lawsuits by plaintiffs asserting conflicting claims to the same fund. A one-sided application of

Hanover Shoe substantially increases the possibility of inconsistent adjudications—and therefore of unwarranted multiple liability for the defendant—by presuming that one plaintiff (the direct purchaser) is entitled to full recovery while preventing the defendant from using that presumption against the other plaintiff; overlapping recoveries are certain to result from the two law-

suits unless the indirect purchaser is unable to establish any pass-on whatsoever. As in

Hawaii v. Standard Oil Co. of Cal., 405 U. S. 251, 264 (1972), we are unwilling to “open the door to duplicative recoveries” under § 4.¹¹

Second, the reasoning of

Hanover Shoe cannot justify unequal treatment of plaintiffs and defendants with respect to the permissibility of pass-on arguments. The principal basis for the decision in

Hanover Shoe was the Court‘s perception of the uncertainties and difficulties in analyzing price and out-

put decisions “in the real economic world rather than an economist‘s hypothetical model,”

392 U. S., at 493, and of the costs to the judicial system and the efficient enforcement of the antitrust laws of attempting to reconstruct those decisions in the courtroom.¹² This perception that the attempt to trace the complex economic adjustments to a change in the cost of a particular factor of production would greatly complicate and reduce the effectiveness of already protracted treble-damages proceedings applies with no less force to the assertion of pass-on theories by plaintiffs than it does to the assertion by defendants. However “long and complicated” the proceedings would be when defendants sought to prove pass-on, ibid., they would be equally so when the same evidence was introduced by plaintiffs. Indeed, the evidentiary complexities and uncertainties involved in the defensive use of pass-on against a direct purchaser are multiplied in the offensive use of pass-on by a plaintiff several steps removed from the defendant in the chain of distribution. The demonstration of how much of the overcharge was passed on by the first purchaser must be repeated at each point at which

the price-fixed goods changed hands before they reached the plaintiff.¹³

It is argued, however, that

Hanover Shoe rests on a policy of ensuring that a treble-damages plaintiff is available to deprive antitrust violators of “the fruits of their illegality,”

id., at 494, a policy that would be furthered by allowing plaintiffs but not defendants to use pass-on theories. See, e. g.,

In re Western Liquid Asphalt Cases, 487 F. 2d 191, 197 (CA9 1973), cert. denied sub nom.

Standard Oil Co. of Cal. v. Alaska, 415 U. S. 919 (1974); Brief for United States as Amicus Curiae 4-6, 12-13, 17-19.¹⁴ We do not read the Court‘s

concern in

Hanover Shoe for the effectiveness of the trebledamages remedy as countenancing unequal application of the Court‘s pass-on rule. Rather, we understand

Hanover Shoe

pass-on under § 4 would be resolved favorably to plaintiffs by this Court. See 122 Cong. Rec. H10295 (daily ed., Sept. 16, 1976). Congress made clear, however, that this legislation did not alter the definition of which overcharged persons were injured within the meaning of § 4. It simply created a new procedural device—parens patriae actions by States on behalf of their citizens—to enforce existing rights of recovery under § 4. The House Report quoted above stated that the parens patriae provision “creates no new substantive liability“; the relevant language of the newly enacted § 4C (a) of the Clayton Act tracks that of existing § 4, showing that it was intended only as “an alternative means . . . for the vindication of existing substantive claims.” H. R. Rep. No. 94-499, supra, at 9. “The establishment of an alternative remedy does not increase any defendant‘s liability.” Ibid. Representative Rodino himself acknowledged in the remarks cited above that this legislation did not create a right of recovery for consumers where one did not already exist. We thus cannot agree with the dissenters that the legislative history of the 1976 Antitrust Improvements Act is dispositive as to the interpretation of § 4 of the Clayton Act, enacted in 1914, or the predecessor section of the Sherman Act, enacted in 1890. Post, at 756-758. The cases cited by MR. JUSTICE BRENNAN, post, at 765 n. 24, to support his reliance on this legislation all involved specific statutory language that was thought to clarify the meaning of an earlier statute. E. g.,

Red Lion Broadcasting Co. v. FCC, 395 U. S. 367, 380-381 (1969) (language in 1959 amendment to § 315 of the Communications Act approved fairness doctrine adopted by FCC under the “public interest” standard of the original Act). Here, by contrast, Congress borrowed the language of § 4 in adding the parens patriae section. The views expressed by particular legislators as to the meaning of that language in § 4 “cannot serve to change the legislative intent of Congress . . . ‘since the statements were [made] after passage of the [Clayton] Act.‘”

Regional Rail Reorganization Act Cases, 419 U. S. 102, 132 (1974), quoting

National Woodwork Mfrs. Assn. v. NLRB, 386 U. S. 612, 639 n. 34 (1967). While we do not lightly disagree with the reading of

Hanover Shoe urged by these legislators, we think the construction of § 4 adopted in that decision cannot be applied for the exclusive benefit of plaintiffs. Should Congress disagree with this result, it may, of course, amend the section to change it. But it has not done so in the recent parens patriae legislation.

as resting on the judgment that the antitrust laws will be more effectively enforced by concentrating the full recovery for the overcharge in the direct purchasers rather than by allowing every plaintiff potentially affected by the overcharge to sue only for the amount it could show was absorbed by it.

We thus decline to construe § 4 to permit offensive use of a pass-on theory against an alleged violator that could not use the same theory as a defense in an action by direct purchasers. In this case, respondents seek to demonstrate that masonry contractors, who incorporated petitioners’ block into walls and other masonry structures, passed on the alleged overcharge on the block to general contractors, who incorporated the masonry structures into entire buildings, and that the general contractors in turn passed on the overcharge to respondents in the bids submitted for those buildings. We think it clear that under a fair reading of

Hanover Shoe petitioners would be barred from asserting this theory in a suit by the masonry contractors.

In

Hanover Shoe this Court did not endorse the broad exception that had been recognized in that case by the courts below—permitting the pass-on defense against middlemen who did not alter the goods they purchased before reselling them.¹⁵ The masonry contractors here could not be included under this exception in any event, because they transform the concrete block purchased from defendants into the masonry portions of buildings. But this Court in

Hanover Shoe

indicated the narrow scope it intended for any exception to its rule barring pass-on defenses by citing, as the only example of a situation where the defense might be permitted, a preexisting cost-plus contract. In such a situation, the purchaser is insulated from any decrease in its sales as a result of attempting to pass on the overcharge, because its customer is committed to buying a fixed quantity regardless of price. The effect of the overcharge is essentially determined in advance, without reference to the interaction of supply and demand that complicates the determination in the general case. The competitive bidding process by which the concrete block involved in this case was incorporated into masonry structures and then into entire buildings can hardly be said to circumvent complex market interactions as would a cost-plus contract.¹⁶

We are left, then, with two alternatives: either we must overrule

Hanover Shoe (or at least narrowly confine it to its facts), or we must preclude respondents from seeking to recover on their pass-on theory. We choose the latter course.

III

In considering whether to cut back or abandon the

Hanover Shoe rule, we must bear in mind that considerations of stare decisis weigh heavily in the area of statutory construction, where Congress is free to change this Court‘s interpretation of its legislation. See

Edelman v. Jordan, 415 U. S. 651, 671 (1974);

Burnet v. Coronado Oil & Gas Co., 285 U. S. 393, 406-408 (1932) (Brandeis, J., dissenting). This presumption of adherence to our prior decisions construing legislative enactments would support our reaffirmance of the

Hanover Shoe

construction of § 4, joined by eight Justices without dissent only a few years ago,¹⁷ even if the Court were persuaded that the use of pass-on theories by plaintiffs and defendants in treble-damages actions is more consistent with the policies underlying the treble-damages action than is the

Hanover Shoe rule. But we are not so persuaded.

Permitting the use of pass-on theories under § 4 essentially would transform treble-damages actions into massive efforts to apportion the recovery among all potential plaintiffs that could have absorbed part of the overcharge—from direct purchasers to middlemen to ultimate consumers. However appealing this attempt to allocate the overcharge might seem in theory, it would add whole new dimensions of complexity to treble-damages suits and seriously undermine their effectiveness.

As we have indicated, potential plaintiffs at each level in the distribution chain are in a position to assert conflicting claims to a common fund—the amount of the alleged overcharge—by contending that the entire overcharge was absorbed at that particular level in the chain.¹⁸ A treble-damages action brought by one of these potential plaintiffs (or one class of potential plaintiffs) to recover the overcharge implicates all three of the interests that have traditionally been thought to support compulsory joinder of absent and potentially adverse claimants: the interest of the defendant in

avoiding multiple liability for the fund; the interest of the absent potential plaintiffs in protecting their right to recover for the portion of the fund allocable to them; and the social interest in the efficient administration of justice and the avoidance of multiple litigation. Reed, Compulsory Joinder of Parties in Civil Actions, 55 Mich. L. Rev. 327, 330 (1957). See

Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U. S. 102, 110-111 (1968); 7 C. Wright & A. Miller, Federal Practice and Procedure § 1602 (1972).

Opponents of the

Hanover Shoe rule have recognized this need for compulsory joinder in suggesting that the defendant could interplead potential claimants under 28 U. S. C. § 1335.¹⁹ But if the defendant, for any of a variety of reasons,²⁰ does not choose to interplead the absent potential claimants, there would be a strong argument for joining them as “persons needed for just adjudication” under Fed. Rule Civ. Proc. 19 (a).²¹ See Comment, Standing to Sue in Antitrust Cases:

The Offensive Use of Passing-On, 123 U. Pa. L. Rev. 976, 998 (1975). These absent potential claimants would seem to fit the classic definition of “necessary parties,” for purposes of compulsory joinder, given in

Shields v. Barrow, 17 How. 130, 139 (1855):

“Persons having an interest in the controversy, and who ought to be made parties, in order that the court may act on that rule which requires it to decide on, and finally determine the entire controversy, and do complete justice, by adjusting all the rights involved in it.”

See Notes of Advisory Committee on 1966 Amendment to Rule 19, 28 U. S. C. App., p. 7760; 7 C. Wright & A. Miller, supra, §§ 1604, 1618; 3A J. Moore, Federal Practice ¶ 19.08 (1974). The plaintiff bringing the treble-damages action would be required, under Fed. Rule Civ. Proc. 19 (c), to “state the names, if known,” of these absent potential claimants; they should also be notified by some means that the action was pending.²² Where, as would often be the case, the potential claimants at a particular level of distribution are so numerous that joinder of all is impracticable, a representative presumably would have to be found to bring them into the action as a class. See Fed. Rule Civ. Proc. 19 (d); 3A J. Moore, supra, ¶ 19.21.

It is unlikely, of course, that all potential plaintiffs could or would be joined. Some may not wish to assert claims to the

overcharge; others may be unmanageable as a class; and still others may be beyond the personal jurisdiction of the court. We can assume that ordinarily the action would still proceed, the absent parties not being deemed “indispensable” under Fed. Rule Civ. Proc. 19 (b). See

Provident Tradesmens Bank & Trust Co. v. Patterson, supra. But allowing indirect purchasers to recover using pass-on theories, even under the optimistic assumption that joinder of potential plaintiffs will deal satisfactorily with problems of multiple litigation and liability, would transform treble-damages actions into massive multiparty litigations involving many levels of distribution and including large classes of ultimate consumers remote from the defendant. In treble-damages actions by ultimate consumers, the overcharge would have to be apportioned among the relevant wholesalers, retailers, and other middlemen, whose representatives presumably should be joined.²³ And in suits

by direct purchasers or middlemen, the interests of ultimate consumers are similarly implicated.²⁴

There is thus a strong possibility that indirect purchasers remote from the defendant would be parties to virtually every treble-damages action (apart from those brought against defendants at the retail level). The Court‘s concern in

Hanover Shoe to avoid weighing down treble-damages actions with the “massive evidence and complicated theories,”

392 U. S., at 493, involved in attempting to establish a pass-on defense against a direct purchaser applies a fortiori to the attempt to trace the effect of the overcharge through each step in the distribution chain from the direct purchaser to the ultimate consumer. We are no more inclined than we were in

Hanover Shoe to ignore the burdens that such an attempt would impose on the effective enforcement of the antitrust laws.

Under an array of simplifying assumptions, economic theory provides a precise formula for calculating how the overcharge is distributed between the overcharged party (passer) and its customers (passees). If the market for the passer‘s product is perfectly competitive; if the overcharge is imposed equally on all of the passer‘s competitors; and if the passer maximizes its profits, then the ratio of the shares of the overcharge borne by passee and passer will equal the ratio of the elasticities of supply and demand in the market for the passer‘s product.²⁵

Even if these assumptions are accepted, there remains a serious problem of measuring the relevant elasticities—the percentage change in the quantities of the passer‘s product demanded and supplied in response to a one percent change in price. In view of the difficulties that have been encountered, even in informal adversary proceedings, with the statistical techniques used to estimate these concepts, see Finkelstein, Regression Models in Administrative Proceedings, 86 Harv. L. Rev. 1442, 1444 (1973), it is unrealistic to think that elasticity studies introduced by expert witnesses will resolve the pass-on issue. We need look no further than our own difficulties with sophisticated statistical methodology that were evident last Term in

Gregg v. Georgia, 428 U. S. 153 (1976), and its companion cases. See

id., at 184-185 (joint opinion of STEWART, POWELL, and STEVENS, JJ.); 233-236 (MARSHALL, J., dissenting);

Roberts v. Louisiana, 428 U. S. 325, 354-355 (1976) (WHITE, J., dissenting).

More important, as the

Hanover Shoe Court observed,

392 U. S., at 493, “in the real economic world rather than an economist‘s hypothetical model,” the latter‘s drastic simplifications generally must be abandoned. Overcharged direct purchasers often sell in imperfectly competitive markets. They often compete with other sellers that have not been subject to the overcharge; and their pricing policies often cannot be explained solely by the convenient assumption of profit maximization.²⁶ As we concluded in

Hanover Shoe,

392 U. S., at 492,

attention to “sound laws of economics” can only heighten the awareness of the difficulties and uncertainties involved in determining how the relevant market variables would have behaved had there been no overcharge.²⁷

It is quite true that these difficulties and uncertainties will be less substantial in some contexts than in others. There have been many proposals to allow pass-on theories in some of these contexts while preserving the

Hanover Shoe rule in others. Respondents here argue, not without support from some lower courts,²⁸ that pass-on theories should be permitted for middlemen that resell goods without altering them and for contractors that add a fixed percentage markup to the cost of their materials in submitting bids. Brief for Respondents 9-30; Tr. of Oral Arg. 36-48. Exceptions to the

Hanover Shoe rule have also been urged for other situations in which most of the overcharge is purportedly passed on—for example, where a price-fixed good is a small but vital input into a

much larger product, making the demand for the price-fixed good highly inelastic. Compare

Philadelphia Housing Auth. v. American Radiator & Standard Sanitary Corp., 50 F. R. D. 13 (ED Pa. 1970), aff‘d sub nom.

Mangano v. American Radiator & Standard Sanitary Corp., 438 F. 2d 1187 (CA3 1971), with

In re Master Key Antitrust Litigation, 1973-2 Trade Cas. ¶ 74,680 (Conn.). See Schaefer, supra n. 25, at 918-925.

We reject these attempts to carve out exceptions to the

Hanover Shoe rule for particular types of markets.²⁹ An exception allowing evidence of pass-on by middlemen that resell the goods they purchase of course would be of no avail to respondents, because the contractors that allegedly passed on the overcharge on the block incorporated it into buildings. See supra, at 735. An exception for the contractors here on the ground that they purport to charge a fixed percentage above their costs would substantially erode the

Hanover Shoe rule without justification. Firms in many sectors of the economy rely to an extent on cost-based rules of thumb in setting prices. See F. Scherer, Industrial Market Structure and Economic Performance 173-179 (1970). These rules are not adhered to rigidly, however; the extent of the markup (or the allocation of costs) is varied to reflect demand conditions. Id., at 176-177. The intricacies of tracing the effect of an overcharge on the purchaser‘s prices, costs, sales, and profits thus are not spared the litigants.

More generally, the process of classifying various market situations according to the amount of pass-on likely to be

involved and its susceptibility of proof in a judicial forum would entail the very problems that the

Hanover Shoe rule was meant to avoid. The litigation over where the line should be drawn in a particular class of cases would inject the same “massive evidence and complicated theories” into treble-damages proceedings, albeit at a somewhat higher level of generality. As we have noted, supra, at 735-736,

Hanover Shoe itself implicitly discouraged the creation of exceptions to its rule barring pass-on defenses, and we adhere to the narrow scope of exemption indicated by our decision there.

The concern in

Hanover Shoe for the complexity that would be introduced into treble-damages suits if pass-on theories were permitted was closely related to the Court‘s concern for the reduction in the effectiveness of those suits if brought by indirect purchasers with a smaller stake in the outcome than that of direct purchasers suing for the full amount of the overcharge. The apportionment of the recovery throughout the distribution chain would increase the overall costs of recovery by injecting extremely complex issues into the case; at the same time such an apportionment would reduce the benefits to each plaintiff by dividing the potential recovery among a much larger group. Added to the uncertainty of how much of an overcharge could be established at trial would be the uncertainty of how that overcharge would be apportioned among the various plaintiffs. This additional uncertainty would further reduce the incentive to sue. The combination of increasing the costs and diffusing the benefits of bringing a treble-damages action could seriously impair this important weapon of antitrust enforcement.

We think the longstanding policy of encouraging vigorous private enforcement of the antitrust laws, see, e. g.,

Perma Life Mufflers, Inc. v. International Parts Corp., 392 U. S. 134, 139 (1968), supports our adherence to the

Hanover Shoe rule, under which direct purchasers are not only spared the burden

of litigating the intricacies of pass-on but also are permitted to recover the full amount of the overcharge. We recognize that direct purchasers sometimes may refrain from bringing a treble-damages suit for fear of disrupting relations with their suppliers.³⁰ But on balance, and until there are clear directions from Congress to the contrary, we conclude that the legislative purpose in creating a group of “‘private attorneys general‘” to enforce the antitrust laws under § 4,

Hawaii v. Standard Oil Co. of Cal., 405 U. S. 251, 262 (1972), is better served by holding direct purchasers to be injured to the full extent of the overcharge paid by them than by attempting to apportion the overcharge among all that may have absorbed a part of it.

It is true that, in elevating direct purchasers to a preferred position as private attorneys general, the

Hanover Shoe rule denies recovery to those indirect purchasers who may have been actually injured by antitrust violations. Of course, as MR. JUSTICE BRENNAN points out in dissent, “from the deterrence standpoint, it is irrelevant to whom damages are paid, so long as some one redresses the violation.” Post, at 760. But § 4 has another purpose in addition to deterring violators and depriving them of “the fruits of their illegality,”

Hanover Shoe, 392 U. S., at 494; it is also designed to compensate victims of antitrust violations for their injuries. E. g.,

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U. S. 477, 485-486 (1977).

Hanover Shoe does further the goal of compensation to the extent that the direct purchaser absorbs at least some and often most of the overcharge. In view of the considerations supporting the

Hanover Shoe rule, we are unwilling to carry the compensation principle to its logical extreme by attempting to allocate damages among all “those within the defendant‘s chain of distribution,” post, at 761, especially

because we question the extent to which such an attempt would make individual victims whole for actual injuries suffered rather than simply depleting the overall recovery in litigation over pass-on issues. Many of the indirect purchasers barred from asserting pass-on claims under the

Hanover Shoe And given the difficulty of ascertaining the amount absorbed by any particular indirect purchaser, there is little basis for believing that the amount of the recovery would reflect the actual injury suffered.

For the reasons stated, the judgment is reversed, and the case is remanded for further proceedings consistent with this opinion.

So ordered.

MR. JUSTICE BRENNAN, with whom MR. JUSTICE MARSHALL and MR. JUSTICE BLACKMUN join, dissenting.

Respondent State of Illinois brought this treble-damages civil antitrust action under § 4 of the Clayton Act on behalf of itself and various local governmental entities in the Greater Chicago area alleging that an overcharge in the price of concrete block used in the construction of public buildings was made by the petitioners, manufacturers and sellers of concrete block, pursuant to a price-fixing conspiracy in violation of § 1 of the Sherman Act, 15 U. S. C. § 1.¹ Section 4 of the Clayton Act, 38 Stat. 731, 15 U. S. C. § 15, broadly provides: “[A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor . . . and shall recover threefold the damages by him sustained . . . .”

Decisions of the Court defining the reach of § 4 have been consistent with its broad objectives: to compensate victims of antitrust violations and to deter future violations. The Court has stated that § 4 “does not confine its protection to consumers, or to purchasers, or to competitors, or to sellers . . . [but] is comprehensive in its terms and coverage, protecting all who are made victims of the forbidden practices by whomever they may be perpetrated.”

Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U. S. 219, 236 (1948).²

Today‘s decision that § 4 affords a remedy only to persons who purchase directly from an antitrust offender is a regrettable retreat from that line of cases. Section 4 was clearly intended to operate to protect individual consumers who purchase through middlemen. Indeed, Congress acted on the premise that § 4 gave a cause of action to indirect as well as direct purchasers when it recently enacted the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 90 Stat. 1394-1396, 15 U. S. C. § 15c et seq. (1976 ed.), and authorized state attorneys general to sue as parens patriae to recover damages on behalf of citizens of their various States.

Today‘s decision flouts Congress’ purpose and severely undermines the effectiveness of the private treble-damages action as an instrument of antitrust enforcement. For in many instances, the brunt of antitrust injuries is borne by indirect purchasers, often ultimate consumers of a product, as increased costs are passed along the chain of distribution.³ In these instances, the Court‘s decision frustrates both the compensation and deterrence objectives of the treble-damages action. Injured consumers are precluded from recovering damages from manufacturers, and direct purchasers who act as middlemen have little incentive to sue suppliers so long as they may pass on the bulk of the illegal overcharges to the ultimate consumers. This frustration of the congressional scheme is in no way mandated by

Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U. S. 481 (1968). To the contrary, the same considerations that

Hanover Shoe held

required rejection of the defendant‘s argument there, that because plaintiff had passed on cost increases to consumers in the form of higher prices defendant should be relieved of liability—especially the consideration that it is essential to the public interest to preserve the effectiveness of the private treble-damages action—require affirmance of the decision below construing § 4 to authorize respondents’ suit.

I

In

Hanover Shoe, supra, the Court held that a defendant in a treble-damages action could not escape liability, except in very limited circumstances,⁴ by proof that the plaintiff had passed on illegal overcharges to others farther along in the chain of distribution.⁵ The defendant in

Hanover Shoe, United Shoe, argued that Hanover was not entitled to recover damages because the increased price it had paid for United‘s equipment⁶ had in turn been reflected in the increased price at which Hanover had sold its shoes to the consuming public. The Court held that several reasons supported its conclusion that this defense was not available to United despite “the argument that sound laws of economics require” its recognition,

392 U. S., at 492. First, the Court followed earlier cases holding that the “victim of an overcharge is [immediately]

damaged within the meaning of § 4 to the extent of that overcharge.”

Id., at 491. The particularly apt precedent supporting this proposition was

Southern Pacific Co. v. Darnell-Taenzer Lumber Co., 245 U. S. 531 (1918), where a pass-on defense had been rejected because of “[t]he general tendency of the law, in regard to damages at least, . . . not to go beyond the first step,” and the Court‘s belief that “[t]he carrier ought not to be allowed to retain his illegal profit, and the only one who can take it from him is the one that alone was in relation with him, and from whom the carrier took the sum. . . .”

Id., at 533-534. In other words, the requirement of privity between plaintiff and defendant was a reason to deny defendant the pass-on defense, since otherwise the defendant would be able to profit by his own wrong.

Hanover Shoe cannot be read, however, as limiting actions to parties in privity with one another. That was made clear in

Perkins v. Standard Oil Co., 395 U. S. 642, 648 (1969), decided the next Term, a price discrimination case in which the Court traced an illegal overcharge through several levels in the chain of distribution, ultimately holding that a plaintiff seeking to recover damages need show only a “causal connection between the price discrimination in violation of the [antitrust laws] and the injury suffered. . . . If there is sufficient evidence in the record to support an inference of causation, the ultimate conclusion as to what that evidence proves is for the jury.”

Darnell-Taenzer does, however, support

Hanover Shoe‘s denial of the pass-on defense for the other reasons relied upon in

Hanover Shoe: the difficulty of proving and quantifying a pass-on, and the role of the treble-damages action as the most effective means of antitrust enforcement.

392 U. S., at 492-494.

The Court correctly discerned that the difficulty of recon-

structing hypothetical pricing decisions,⁸ would aggravate the already complex nature of antitrust litigation since pass-on defenses would become commonplace whenever the chain of distribution extended beyond the plaintiff. This would lessen the effectiveness of the treble-damages action, since ultimate consumers individually often suffer only minor damages and therefore have little incentive to bring suit. Limiting defendants’ liability to the loss of profits suffered by direct purchasers would thus allow the antitrust offender to avoid having to pay the full social cost of his illegal conduct in many cases in which indirect purchasers failed to bring suit. Consequently,

“those who violate the antitrust laws by price fixing or monopolizing would retain the fruits of their illegality because no one was available who would bring suit against them. Treble damage actions, the importance of which the Court has many times emphasized, would be substantially reduced in effectiveness.”

Id., at 494.

Hanover Shoe thus confronted the Court with the choice, as had been true in

Darnell-Taenzer, of interpreting § 4 in a way that might overcompensate the plaintiff, who had certainly suffered some injury, or of defining it in a way that underdeters the violator by allowing him to retain a portion of his ill-gotten overcharges. The Court chose to interpret § 4 so as to allow the plaintiff to recover for the entire overcharge. This choice was consistent with recognition of the importance

of the treble-damages action in deterring antitrust violations. But

Hanover Shoe certainly did not imply that an indirect purchaser would not also have a cause of action under § 4 when the illegal overcharges were passed on to him.⁹

Despite the superficial appeal of the argument that

Hanover Shoe should be applied “consistently,” thus precluding plaintiffs and defendants alike from proving that increased costs were passed along the chain of distribution, there are sound reasons for treating offensive and defensive passing-on cases differently. The interests at stake in “offensive” passing-on cases, where the indirect purchasers sue for damages for their injuries, are simply not the same as the interests at stake in the

Hanover Shoe, or “defensive” passing-on situation. There is no danger in this case, for example, as there was in

Hanover Shoe, that the defendant will escape liability and frustrate the objectives of the treble-damages action. Rather, the same policies of insuring the continued effectiveness of the treble-damages action and preventing wrongdoers from retaining the spoils of their misdeeds favor allowing indirect purchasers to prove that overcharges were passed on to them.

Hanover Shoe thus can and should be limited to cases of defensive assertion of the passing-on defense to antitrust liability, where direct and indirect purchasers are not parties in the same action.¹⁰ I fully agree with the observation:

“The attempt to transform a rejection of a defense

because it unduly hampers antitrust enforcement into a reason for a complete refusal to entertain the claims of a certain class of plaintiffs seems an ingenious attempt to turn the decision [in

Hanover Shoe] and its underlying rationale on its head.”

In re Master Key Antitrust Litigation, 1973-2 Trade Cas. ¶ 74,680, pp. 94,978-94,979 (Conn.).

II

A

Today‘s decision goes far to frustrate Congress’ objectives in creating the treble-damages action. Treble-damages actions were first authorized under § 7 of the Sherman Act, 26 Stat. 210. The legislative history of this section shows that it was conceived primarily as a remedy for “[t]he people of the United States as individuals,” especially for consumers. See, e. g., 21 Cong. Rec. 1767-1768 (1890) (remarks of Sen. George); see also id., at 2612 (Sens. Teller and Reagan), 2615 (Sen. Coke), 2640 (Sen. Spooner).¹¹ In the Clayton Act of

1914, Congress extended the § 7 remedy to persons injured by “any violation of the antitrust laws.” See

Brunswick Corp v. Pueblo Bowl-O-Mat, Inc., 429 U. S. 477, 486 n. 10 (1977), citing H. R. Rep. No. 627, 63d Cong., 2d Sess., 14 (1914). These actions were conceived primarily as “‘open[ing] the door of justice to every man, whenever he may be injured by those who violate the antitrust laws, and giv[ing] the injured party ample damages for the wrong suffered.‘” ¹²

Brunswick, supra, at 486 n. 10, quoting 51 Cong. Rec. 9073 (1914) (remarks of Rep. Webb); see, e. g., id., at 9079 (Rep. Volstead), 9270 (Rep. Carlin), 9414-9417, 9466-9467, 9487-9495. See also the House debates following the conference committee report. Id., at 16274-16275 (Rep. Webb), 16317-16319 (Rep. Floyd).

The Court has interpreted § 4 broadly, this in recognition of the plainly stated congressional objective,

Northern Pacific R. Co. v. United States, 356 U. S. 1, 4 (1958), that the private treble-damages action play a paramount role in the enforcement of the fundamental economic policy of the Nation,

Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U. S. 100, 130-131 (1969);

Minnesota Mining & Mfg. Co. v. New Jersey Wood Finishing Co., 381 U. S. 311, 318 (1965), and has concluded that “the purposes of the antitrust laws are best served by insuring that the private action will be an ever-present threat to deter anyone contemplating business behavior in violation of the antitrust laws.”

Perma Life Mufflers, Inc. v. International Parts Corp., 392 U. S. 134, 139 (1968). The federal courts have accordingly been cautioned “not [to]

add requirements to burden the private litigant beyond what is specifically set forth by Congress in [the antitrust] laws,”

Radovich v. National Football League, 352 U. S. 445, 454 (1957), and express approval has been given the “‘tendency of the courts . . . to find some way in which damages can be awarded where a wrong has been done. Difficulty of ascertainment is no longer confused with right of recovery’ for a proven invasion of the plaintiff‘s rights.”

Bigelow v. RKO Radio Pictures, 327 U. S. 251, 265-266 (1946). See also

Zenith Radio Corp. v. Hazeltine Research, Inc., supra, at 130-131;

Perma Life Mufflers, Inc. v. International Parts Corp., supra;

Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U. S., at 494. And

Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U. S. 656, 660 (1961), emphasized that to plead a cause of action under § 4 “allegations adequate to show a violation and . . . that plaintiff was damaged thereby are all the law requires.”

B

The recently enacted Hart-Scott-Rodino Antitrust Improvements Act of 1976 was expressly adopted to create “an effective mechanism to permit consumers to recover damages for conduct which is prohibited by the Sherman Act, by giving State attorneys general a cause of action [to sue as parens patriae on behalf of the States’ citizens] against antitrust violators.” S. Rep. No. 94-803, p. 6 (1976). Title III of the new Act responded to the holding of

Hawaii v. Standard Oil Co. of Cal., 405 U. S. 251 (1972), that the Clayton Act does not authorize a State to sue for damages for an injury to its general economy allegedly attributable to a violation of the antitrust laws. The Senate Report accompanying the new Act expressly found that “[t]he economic burden of most antitrust violations is borne by the consumer in the form of higher prices for goods and services,” S. Rep. No. 94-803, supra, at 39, and it is clear that the new Act is intended to provide a remedy

for injured consumers whether or not they purchased directly from the violator. The Senate Report states, id., at 42:

“A direct cause of action is granted the States to avoid the inequities and inconsistencies of restrictive judicial interpretations. . . . Section 4C is intended to assure that consumers are not precluded from the opportunity of proving the amount of their damage and to avoid problems with respect to manageability [of class actions], standing, privity, target area, remoteness, and the like.”¹³ (Emphasis supplied.)

Representative Rodino, a sponsor, stated during the House debates:

“[A]ssuming the State attorney general proves a violation, and proves that an overcharge was ‘passed on’ to the consumers, injuring them ‘in their property‘; that is, their pocketbooks—recoveries are authorized by the compromise bill whether or not the consumers purchased directly from the price fixer, or indirectly, from intermediaries, retailers, or middlemen. The technical and procedural argument that consumers have no ‘standing’ whenever they are not ‘in privity’ with the price fixer, and have not purchased directly from him, is rejected by the compromise bill. Opinions relying on this procedural

technicality . . . are squarely rejected by the compromise bill.” 122 Cong. Rec. H10295 (daily ed. Sept. 16, 1976).

It is difficult to see how Congress could have expressed itself more clearly. Even if the question whether indirect purchasers could recover for damages passed on to them was open before passage of the 1976 Act, and I do not believe that it was, Congress’ interpretation of § 4 in enacting the parens patriae provision should resolve it in favor of their authority to sue. Indeed, the House Report accompanying the bill actually referred to the opinion of the District Court in this case as an example of the correct answer. N. 13, supra. The Court‘s tortuous efforts to impose a “consistency” upon this area of the law that Congress has so clearly rejected is a return to the “legal somersaults and twistings and turnings” of the Court‘s earlier opinions that ultimately led to the passage of the Clayton Act in 1914 to salvage the ailing Sherman Act. See 51 Cong. Rec. 9086 (1914) (remarks of Rep. Kelly).

III

Hanover Shoe correctly observed that the necessity of tracing a cost increase through several levels of a chain of distribution “would often require additional long and complicated proceedings involving massive evidence and complicated theories.”

392 U. S., at 493. But this may be said of almost all antitrust cases.

Hanover Shoe itself highlights this unavoidable complication, in that it requires the plaintiff to prove a probable course of events which would have occurred but for the violation.¹⁴ In essence, estimating the amount of

damages passed on to an indirect purchaser is no different from and no more complicated than estimating what the middleman‘s selling price would have been, absent the violation. See ante, at 733 n. 13.

Nor should the fact that the price-fixed product in this case (the concrete block) was combined with another product (the buildings) before resale operate as an absolute bar to recovery. It may well be true, as the State claims, that the cost of the block was included separately in the project bids and therefore can be factored out from the price of the building with relative certainty. In any case, this is a factual matter to be determined based on the strength of the plaintiff‘s evidence.¹⁵ See, e. g.,

In re Western Liquid Asphalt Cases, 487 F. 2d 191 (CA9 1973), cert. denied sub nom.

Standard Oil Co. of Cal. v. Alaska, 415 U. S. 919 (1974). Admittedly, there will be many cases in which the plaintiff will be unable to prove that the overcharge was passed on. In others, the portion of the overcharge passed on may be only approximately determinable. But again, this problem hardly distinguishes this case from other antitrust cases. Reasoned estimation is required in all antitrust cases, but “while the damages [in such cases] may not be determined by mere speculation or guess, it will be enough if the evidence show the extent of the damages as a matter of just and reasonable inference, although the result be only approximate.”

Story Parchment Co. v. Paterson Co., 282 U. S. 555, 563 (1931). See also

Bigelow v. RKO Radio Pictures, 327 U. S., at 266;

Eastman Kodak Co. v. Southern Photo Materials Co., 273 U. S. 359, 379 (1927). Lack of precision in apportioning damages between direct and indirect purchasers is thus plainly not a convincing reason for denying

indirect purchasers an opportunity to prove their injuries and damages. Moreover, from the deterrence standpoint, it is irrelevant to whom damages are paid, so long as someone redresses the violation. Antitrust violators are equally deterred whether the judgments against them are in favor of direct or indirect purchasers.

Hanover Shoe said as much. The Court‘s decision recognized that some plaintiffs would recover more than their due, but concluded that the necessity of assuring that someone recover and thus deter future violations and prevent the antitrust offender from profiting by his illegal overcharge outweighed any resulting injustice.¹⁶

I concede that despite the broad wording of § 4 there is a point beyond which the wrongdoer should not be held liable. See, e. g.,

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U. S. 477 (1977);

Hawaii v. Standard Oil Co. of Cal., 405 U. S. 251 (1972). Courts have therefore developed various tests of antitrust “standing,” not unlike the concept of proximate cause in tort law, to define that point. The definition has been variously articulated, usually in terms of two tests. The more restrictive test focuses on the directness of the injury;¹⁷ the more liberal, and more widely accepted, on whether the plaintiff is within the “target area” of the defendant‘s violation.¹⁸

But if the broad language of § 4 means anything, surely it must render the defendant liable to those within the defendant‘s chain of distribution. It would indeed be “paradoxical to deny recover to the ultimate consumer while permitting the middlemen a windfall recovery.” P. Areeda, Antitrust Analysis: Problems, Text, Cases 75 (2d ed. 1974).

IV

I acknowledge some abstract merit in the argument that to allow indirect purchasers to sue, while, at the same time, precluding defendants from asserting pass-on defenses in suits by direct purchasers, subjects antitrust defendants to the risk of multiple liability. But as a practical matter, existing procedural mechanisms can eliminate this danger in most instances. Even though, as the Court says, no procedure currently exists which can eliminate the possibility entirely, ante, at 731 n. 11, the hypothetical possibility that a few defendants might be subjected to the danger of multiple liability does not, in my view, justify erecting a bar against all recoveries by indirect purchasers without regard to whether the particular case presents a significant danger of double recovery. The “double recovery” specter was argued in the Congress that passed the Hart-Scott-Rodino Act, and was rejected. The Senate Report recorded the Act‘s purpose to codify the holding of the Court of Appeals for the Ninth Circuit in

In re Western Liquid Asphalt Cases, supra:

“We therefore see no problem of double recovery, and we believe that if this difficulty should arise in some other connection, the district court will be able to fashion relief accordingly. In addition to the court‘s control over its decree, numerous devices exist. We note that the consolidation of cases, which has already occurred, is one means of averting duplicitous awards. The short, four-year statute of limitations is another; later suits, after

final judgment herein, are unlikely. 15 U. S. C. § 15b. In other cases, it may be that statutory interpleader, 28 U. S. C. § 1335, could be used by antitrust defendants to avoid double liability. If necessary, special masters may be appointed to handle complex cases. Finally, there are the doctrines of res judicata and collateral estoppel and procedures for compulsory joinder. The day is long past when courts, particularly federal courts, will deny relief to a deserving plaintiff merely because of procedural difficulties or problems of apportioning damages.”

“We would prefer to place the burden of proving apportionment upon appellees, rather than deny all recovery to appellants. Such a burden would be the consequence of appellees’ illegal acts, not appellants’ suits. Where the choice is between a windfall to intermediaries or letting guilty defendants go free, liability is imposed.

Hanover Shoe, supra, 392 U. S. at 494. So, too, between ultimate purchasers and defendants.” S. Rep. No. 94-803, p. 44 (1976), quoting

487 F. 2d, at 201 (citation omitted).

Moreover, the possibility of multiple recovery arises in only two situations: (1) where suits by direct and indirect purchasers are pending at the same time but in different courts; and (2) where additional suits are filed after an award of damages based on the same violation in a prior suit.¹⁹ In the first situation, the United States, Brief as Amicus Curiae 25, cogently points out that district courts may make use of the alternatives suggested by the Manual for Complex Litigation, 1 (pt. 2) J. Moore, Federal Practice (1976): district courts may use the intradistrict transfer power created by 28 U. S. C. § 1404 (b), coordinate pretrial proceedings of cases pending in

different districts, or transfer cases to a single district pursuant to § 1404 (a). In addition, the Judicial Panel on Multidistrict Litigation is empowered by 28 U. S. C. § 1407 to transfer cases involving common questions of fact to any district for coordinated pretrial proceedings upon its determination that the transfer “will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions.” After pretrial transfers under this section, cases can be consolidated and transferred to the same district for trial pursuant to the transfer power under § 1404 (a).²⁰ A further device mentioned in

Western Liquid Asphalt is statutory interpleader under 28 U. S. C. § 1335, by which the defendant can bring all potential plaintiffs into the same court and require them to litigate inter se to determine their appropriate shares of the total recovery.²¹

True, there is a greater hypothetical danger of multiple recovery where suits are independently instituted after an earlier suit based on the same violation has proceeded to judgment.²² But even here the likelihood that defendants

will be subjected to multiple liability is, as a practical matter, remote. The extended nature of antitrust actions, often involving years of discovery, combines with the short four-year statute of limitations to make it impractical for potential plaintiffs to sit on their rights until after entry of judgment in the earlier suit.

The Court today regrettably weakens the effectiveness of the private treble-damages action as a deterrent to antitrust violations by, in most cases, precluding consumers from recovering for antitrust injuries. For in many instances, consumers, although indirect purchasers, bear the brunt of antitrust violations. To deny them an opportunity for recovery is particularly indefensible when direct purchasers, acting as middlemen, and ordinarily reluctant to sue their suppliers,²³ pass on the bulk of their increased costs to consumers farther along the chain of distribution. Congress has given us a clear signal that § 4 is not to be read to have the restrictive

scope ascribed to it by the Court today. I would follow the congressional understanding and therefore would affirm.²⁴

MR. JUSTICE BLACKMUN, dissenting.

I regard MR. JUSTICE BRENNAN‘s dissenting opinion as persuasive and convincing, and I join it without hesitation.

I add these few sentences only to say that I think the plaintiffs-respondents in this case, which they now have lost, are the victims of an unhappy chronology. If

Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U. S. 481 (1968), had not preceded this case, and were it not “on the books,” I am positive that the Court today would be affirming, perhaps unanimously, the judgment of the Court of Appeals. The policy behind the Antitrust Acts and all the signs point in that direction, and a conclusion in favor of indirect purchasers who could demonstrate injury would almost be compelled.

But

Hanover Shoe is on the books, and the Court feels that it must be “consistent” in its application of pass-on. That,

for me, is a wooden approach, and it is entirely inadequate when considered in the light of the objectives of the Sherman and Clayton Acts. The Hart-Scott-Rodino Antitrust Improvements Act of 1976 tells us all that is needed as to Congress’ present understanding of the Acts. Nevertheless, we must now await still another statute which, as the Court acknowledges, ante, at 734 n. 14, the Congress may adopt. One regrets that it takes so long and so much repetitious effort to achieve, and have this Court recognize, the obvious congressional aim.