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Come at the King, You Best Not Miss: The Economics of Direct-Purchaser Suits after Twombly

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Forty 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.