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Klevorick, Alvin K.; Kohler-Hausmann, Issa B. --- "The Plausibility of Twombly: Proving Horizontal Agreements After Twombly" [2012] ELECD 221; in Elhauge, R. Einer (ed), "Research Handbook on the Economics of Antitrust Law" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on the Economics of Antitrust Law

Editor(s): Elhauge, R. Einer

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848440807

Section: Chapter 8

Section Title: The Plausibility of Twombly: Proving Horizontal Agreements After Twombly

Author(s): Klevorick, Alvin K.; Kohler-Hausmann, Issa B.

Number of pages: 45

Extract:

8 The plausibility of Twombly: proving horizontal
agreements after Twombly
Alvin K. Klevorick and Issa B. Kohler-Hausmann*


I INTRODUCTION

One of the most settled, and indeed commonly applauded, elements of US antitrust law
is the prohibition of horizontal agreements among competing firms with regard to their
price and quantity decisions. The seemingly simple language of section 1 of the Sherman
Act states, `Every contract, combination in the form of trust or otherwise, or conspiracy,
in restraint of trade or commerce . . . is declared to be illegal'.1 Yet, since the statute's early
days, courts and commentators have struggled to specify exactly what sort of evidence
ought to suffice to show the existence of an unlawful agreement. This has been especially
troublesome in the context of oligopolistic markets in which it is notoriously difficult to
discern whether the appearance of parallel behavior is the product of coordinated con-
spiracy or simultaneous strategic, yet independent firm decisions.2
Section 1's broad but vague prohibition of agreements in restraint of trade has spawned
a long common law battle over justiciable standards. In particular, is anything more
required than interdependent behavior that achieves supracompetitive returns, and if so,
what more is needed and how is it to be established? There is even dispute about what
constitutes interdependent behavior as opposed to independent behavior.
Two important and yet conflicting policy imperatives fuel the debate over standards of
proof in section 1 cases. On one hand, courts recognize the difficulty (or, in some cases, ...


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