Apple Inc. vs. Pepper Case


Robert Pepper and other dissatisfied people (Edward W. Stephen H. Schwartz, Hater, Eric Terrell) claimed that Apple naturally takes advantage of the monopoly-transformed iPhone app market. As a result, they filed an antitrust lawsuit against Apple Inc. The Apple Company is in charge of certain apps that can be sold on the App Store, and it accounts for a whopping 30% of all sales of apps created by other developers. Furthermore, Apple does not allow the developers of the applications to sell iPhone applications to customers that are not part of the app store.

The district court dismissed the case, and Illinois Brick’s 1977 U.S. Supreme Court ruling could sue for antitrust violations because iPhone app consumers buy directly from app developers rather than Apple Inc. It was ruled that he couldn’t do it against Illinois. Based on Illinois Brick, “only inflated direct buyers, not others in the manufacturing or distribution chain,” can file antitrust proceedings. The dismissal was then changed, however, the 9th District Court made a ruling that the buyers were purchasing from Apple instead of buying from the developers of the application. This hence restricted them from filing antitrust proceedings under the Illinois Brick.

Case History

On May 13, 2019, the United States Supreme Court issued its decision in Apple Inc v. Pepper 2019. The court ruled that anyone who bought an app from Apple’s App Store was a direct buyer and thus had the right to sue Apple for monopolizing the market and driving up prices. On November 26, 2018, the case was heard by the United States Supreme Court. It was certified and submitted to the United States Court of Appeals for the 9th Circuit.

Is it possible to file an antitrust proceeding against the person who delivered the goods, even if the consumer claims damages based on a price set by a third party who is the direct victim of the tort?

Statement of Facts

Apple Inc. sells iPhone apps directly to users through the App Store, which is the only legitimate place to buy apps for iPhones. A large number of these applications have been developed by autonomous developers on behalf of Apple. Apple Company charges developers an annual fee of $99, grants developers the right to set retail prices for the application in question, and charges a 30% (percent) fee for each app sold. The defendants, the four owners of iPhones, filed a lawsuit against Apple for illegally monopolizing the secondary market for iPhone applications. The Apple Company has denied the allegations and stated that the owner of the iPhone is not a direct purchaser of Apple and cannot proceed with the proceedings. The district court agreed, but the US 9th Circuit Court of Appeals overturned and found that the owner of the iPhone was a direct purchaser because he purchased the app directly from Apple Inc.

The Rule of law

The Illinois Supreme Court case introduced the Brightline Rule (Illinois Brick Co. v. Illinois, 431 US 720, Supreme Court 1977). This allows direct buyers to bring claims against antitrust violators who have purchased goods or services. Illinois bricks are not the subject of the economic theory of prices for services and goods. Instead, Illinois Brick asked for an efficient and effective process in the cartel issue. To do this, the court has drawn a line that allows the buyer to sue directly but allows the buyer to also sue indirectly. In the absence of an intermediary between the buyer and the infringer, the buyer may initiate legal proceedings. The Illinois Brick Brightline Rule is based on the belief that streamlined controls will improve the enforcement of written antitrust laws. And, as written, direct buyers of exclusive retailers are the appropriate plaintiffs to sue those retailers.


The iPhone owners have used the company’s exclusive rights in the retail market to sell their applications illegally, forcing the iPhone owners to pay. The owner is a direct purchaser and may have filed a lawsuit against the company for monopolizing the owner of the application purchased directly from the company. Hence, the application price will be higher. Antitrust law became the focus as Congress passed an overwhelming majority and President Benjamin Harrison signed the Sherman Act of 1890 and charged retail prices higher than competitors.


An allegation that a monopoly retailer (in this case, Apple Inc) used monopolies to inflate consumer prices is a classic antitrust allegation. However, Apple strongly believes that the company cannot be sued because the consumer plaintiff is not Apple’s “direct purchaser.” A consumer who purchases goods or services from an exclusive retailer at a higher price than a competitor may sue under antitrust laws. In an Opinion of 5-4, written by Judge Brett Kavanaugh, the court found in this case that the iPhone claimant who had bought the app from the Apple App Store was a direct buyer. They were thus eligible to sue Apple Inc. under the case Illinois Brick Co. Illinois, 431 US 720 (1977).


Apple Inc. v. Pepper, 587 (The United States Supreme Court 2019).

Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977).

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