Apple Inc. v. Pepper (17-204)

argument 17-204

Apple Inc. v. Pepper

Supreme Court of the United States 1h 0m 7 speakers 8 chapters transcribed 4 days ago official recording ↗

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What is the core damages theory behind the Apple‑Pepper antitrust case?

John G. Roberts 0:00

We'll hear argument first this morning in case seventeen two oh four, apple versus

Mr. Wall 0:04

pepper. Mr Wall. Thank you, Mr Chief Justice, and may it please the court. The only damages theory in this monopolisation action is rooted in a thirty percent commission. that Apple charges app developers, and which allegedly causes those developers to increase app prices to consumers. The case is barred by the Court's Illinois BRIC doctrine because the developer's pricing decisions are necessarily in the causal chain that links the Commission to any consumer damages. If the Commission increases beyond the competitive level, But app's developers do not change their app's prices. Consumers suffer no damages. And if app developers do change their prices to pass on some or all of the overcharge, Well, that is precisely the kind of damages theory that the Illinois BRIC Doctrine prohibits.

Ruth Bader Ginsburg 0:57

Is there any In in your view, is there any first spire in this picture?

Mr. Wall 1:03

Excuse me.

Ruth Bader Ginsburg 1:03

Is there any first fire in this picture?

Mr. Wall 1:06

Uh well there's there's two different buyers in this picture. There are the app developers who, by contract with Apple, are um buying a package of services which include distribution and software, intellectual property and testing and and so forth. And then the plaintiffs in this case are the the buyer of the apps themselves that are made with that package of goods and services and

Ruth Bader Ginsburg 1:33

Is there in this case anyone who would qualify as a first buyer uh the standing to sue Apple.

Mr. Wall 1:41

The developers. Yes, w without a doubt. The developers are the ones who, in the first instance, pay the thirty percent commission. I think it's it is it is important to root the analysis in the common ground which has been conceded that the only damages theory is based upon that thirty percent commission. That is charged by contract between Apple and the developers, and it is deducted from whatever price that the developer chooses to to set, subject to only the minimal restrictions.

Elena Kagan 2:17

The customer. It's the customer who pays the thirty percent.

Mr. Wall 2:22

But there has always been a a transaction between Apple and the developer before that, which r has the pricing decision of what the developer is going to do on account of the thirty percent commission.

Elena Kagan 2:39

That was a case of a vertical monopoly. Um Concrete blocks. person manufacturer. uh monopolises the next intermediate market who then sells to a customer.

Mr. Wall 2:56

Yes.

Elena Kagan 2:57

All right. This is not quite like that. This is dramatically different. This is a closed loop.

Mr. Wall 3:03

It is a closed loop, but in terms of the injury theory, which is what is at issue. No, they're crazy.

Elena Kagan 3:19

doesn't have to be thirty percent. They're not seeking thirty percent of their sales. They have to go out and prove at the next step. how without this monopoly they would have paid less. It could be as little as a m d a penny or nothing, or it could be something more. But The point is that this closed loop With Apple as it spoke. They are the first purchaser of that thirty percent markup.

Mr. Wall 3:47

No, th they are not. The first purchaser is clearly the app developer, who by contract agrees that every time it puts a positive price on an app, um it will allow Apple to to take thirty percent of it. Apple collects the the the funds, but even the Ninth Circuit here agreed that that the process, the the payment flow is immaterial to the Illinois brick issue.

Stephen G. Breyer 4:16

Certainly I wouldn't think that's true, even if they concluded it. It's a simple theory. I would have thought it would have been an antitrust for at least a hundred years. What you do is you look to see who you claim is the monopolist. Who do they claim is the monopolist? Apple. Apple. And if you pay more if that's true. Bacon. Raise prices to some people. Lower them to others, their suppliers? And if you are injured because you paid them more, the monopolists, You can collect damages. And if you're injured because they forced your price down, you're a supplier. you can collect damages. End of theory. I don't see anything. in Illinois brick. It conflicts with that?

Mr. Wall 5:00

Everything in the Illinois Brick conflicts with that. The the emphasis in all three of this Court's decision on both pass on defenses and damages theories.