BILL ANALYSIS
By: Eiland
Committee Report (Substituted)
BACKGROUND AND PURPOSE
In Illinois v. Illinois Brick, 431 U.S. 720 (1977), the United States Supreme Court held that only
those entities purchasing directly from antitrust violators may seek to recover damages for harm
suffered as a result of an antitrust violation.
In the 31 years since this court decision, approximately 25 states, including California and New
York, have passed some form of legislation permitting indirect purchasers to recover for
violations of state antitrust law. Approximately 13 additional states, including Florida, permit
indirect purchaser recoveries under state-court interpretation of pre-existing statutes, including
consumer protection statutes. The Supreme Court upheld state indirect purchaser statutes
generally in California v. ARC America Corp., 490 U.S. 93 (1989).
The Texas antitrust statute does not expressly address an indirect purchaser’s ability to seek
redress. However, the Texas Supreme Court concluded in a 1995 case, Abbott Laboratories, Inc.
v. Segura,, a plaintiff cannot use the Texas Deceptive Trade Practices Act to bring an indirect
purchaser damages action for what was essentially an antitrust violation. Texas is virtually alone
among large states lacking an indirect purchaser cause of action in antitrust damage actions.
The committee substitute for House Bill No. 1662 creates a right of action on behalf of Texas
consumers and governmental entities who have been indirectly injured, i.e., did not purchase
directly from the violator, by a violation of the Texas Free Enterprise and Antitrust Act
(TFEAA). The bill gives the attorney general the exclusive authority to enforce this right of
action. The bill also clarifies the attorney general’s authority to represent Texas consumers for
direct injury resulting from violation of the TFEAA.
The procedures outlined in C.S.H.B. 1662 closely parallel the procedures already followed
by the attorney general in federal cases.
Enactment of C.S.H.B. 1662 will ensure that damages can be recovered for Texas consumers
on par with damages recovered by other states that have adopted such legislation.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
C.S.H.B. 1662 amends the Business & Commerce Code by authorizing the attorney general to bring suit on behalf of a governmental entity and, as parens patriae, on behalf of an individual residing in this state for damages incurred directly or indirectly because of a violation of Section 15.05(a), (b), or (c), Business & Commerce Code. The bill sets forth notice requirements for the attorney general in bringing certain suits, how an individual on whose behalf the attorney general brings suit is authorized to elect to be excluded from the suit, provisions relating to res judicata, and provisions for damages.
C.S.H.B. 1662 requires the court, if claims based on substantially the same conduct are asserted against a defendant by the attorney general on behalf of indirect purchasers and by direct purchasers, to avoid imposing duplicate damages for the same injury. The bill provides that the right to sue under this bill applies only to the attorney general and does not create or abolish a right of another person, including another governmental entity, to sue on its own behalf for damages incurred indirectly because of a violation of Section 15.05 (a), (b), or (c), Business & Commerce Code.
C.S.H.B. 1662 provides that the change in law made by this Act applies only to a suit arising out of an injury that an individual suffers on or after the effective date of this Act.
EFFECTIVE DATE
Upon passage, or, if the Act does not receive the necessary vote, the Act takes effect September 1, 2007.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The substitute differs from the original in requiring the notice by the attorney general of suit to an individual to include the date by which the individual must elect to be excluded from the suit.
The substitute modifies the rights of the individual to be excluded from the suit.
The substitute clarifies that the bill does not abolish a right of another person, including another governmental entity, to sue because of a violation of Section 15.05 (a), (b), or (c), Business & Commerce Code.