Come at the King, You Best Not Miss: The Economics of Direct-Purchaser Suits after Twombly
Click here to read the full article onlineForty years ago, the U.S. Supreme Court in Illinois Brick limited private antitrust standing to direct purchasers, but heightened pleading standards from Twombly complicate the direct-purchaser rule. When direct purchasers invest into detecting anticompetitive behavior in order to pursue a lawsuit, they risk retaliation from their suppliers, but at the same time, significant investment into detection is necessary to overcome a motion to dismiss post-Twombly. This commentary on Illinois Brick after Twombly employs a comprehensive economic model to illustrate the incentives and costs for direct purchasers to choose to sue.