Pleading, Discovery, and Proof of Sherman Act Agreements: Harmonizing Twombly and Matsushita

William H. Page, Pleading, Discovery, and Proof of Sherman Act Agreements: Harmonizing Twombly and Matsushita, 82 Antitrust L.J. 123 (2018)

44 Pages Posted: 9 Feb 2017 Last revised: 27 Sep 2018

See all articles by William H. Page

William H. Page

University of Florida - Levin College of Law

Date Written: February 9, 2017

Abstract

Twombly and Matsushita have created a staged decision-theoretic inquiry in which courts ask at the pleading stage and, if necessary, again after discovery whether the plaintiff has made a sufficiently “plausible” showing to justify the expected direct and indirect costs of further inquiry. Rather than pass contentions of fact through the stages of litigation with minimal review, the framework increases the burdens on pretrial motions, professedly to avoid unjustified direct costs of discovery and indirect costs of “false inferences.” In cases like Twombly and Matsushita themselves, that allege price fixing or other per se violations of Section 1 of the Sherman Act, the issue on these motions turns on whether the plaintiff has made a plausible showing of “agreement” rather than "mere" interdependent oligopolistic pricing. As I have shown elsewhere, courts distinguish agreement from interdependent pricing by the sorts of communications the rivals used to coordinate their actions: plaintiffs must allege facts and later offer evidence that raises a plausible inference that the rivals communicated privately about their future competitive choices. Courts differ, however, on whether plausibility means different things at the two stages. Some reason that, because the plaintiff has to find evidence of private communication among rivals, the showing necessary to reach discovery should be less onerous than the showing necessary to reach a jury. I examine the consequences of these different standards, and consider whether predismissal discovery might mitigate the problems of estimation in evaluating plausibility.

Keywords: antitrust, agreement, cartels, price fixing, tacit agreement, oligopoly, interdependent pricing, tacit collusion

JEL Classification: D43, K21, K40, K41, L13, L40, L41

Suggested Citation

Page, William Hepburn, Pleading, Discovery, and Proof of Sherman Act Agreements: Harmonizing Twombly and Matsushita (February 9, 2017). William H. Page, Pleading, Discovery, and Proof of Sherman Act Agreements: Harmonizing Twombly and Matsushita, 82 Antitrust L.J. 123 (2018). Available at SSRN: https://ssrn.com/abstract=2914380 or http://dx.doi.org/10.2139/ssrn.2914380

William Hepburn Page (Contact Author)

University of Florida - Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

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