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10-8037 In re: Text Messaging Antitrust Litigation

By: WISCONSIN LAW JOURNAL STAFF//December 29, 2010//

10-8037 In re: Text Messaging Antitrust Litigation

By: WISCONSIN LAW JOURNAL STAFF//December 29, 2010//

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Antitrust
Sufficiency of the complaint

Where an antitrust complaint alleges that four competitors with 90 percent of the market raised prices, despite falling costs, the complaint states a claim for relief.

“The complaint also alleges that in the face of steeply falling costs, the defendants increased their prices. This is anomalous behavior because falling costs increase a seller’s profit margin at the existing price, motivating him, in the absence of agreement, to reduce his price slightly in order to take business from his competitors, and certainly not to increase his price. And there is more: there is an allegation that all at once the defendants changed their pricing structures, which were heterogeneous and complex, to a uniform pricing structure, and then simultaneously jacked up their prices by a third. The change in the industry’s pricing structure was so rapid, the complaint suggests, that it could not have been accomplished without agreement on the details of the new structure, the timing of its adoption, and the specific uniform price increase that would ensue on its adoption.”

“A footnote in Twombly had described the type of evidence that enables parallel conduct to be interpreted as collusive: ‘Commentators have offered several examples of parallel conduct allegations that would state a [Sherman Act] § 1 claim under this standard . . . [namely,] “parallel behavior that would probably not result from chance, coincidence, independent responses to common stimuli, or mere interdependence unaided by an advance understanding among the parties” . . .[;] “conduct [that] indicates the sort of restricted freedom of action and sense of obligation that one generally associates with agreement.” The parties in this case agree that “complex and historically unprecedented changes in pricing structure made at the very same time by multiple competitors, and made for no other discernible reason” would support a plausible inference of conspiracy.’ Bell Atlantic Corp. v. Twombly, supra, 550 U.S. at 557 n. 4 (citations omitted). That is the kind of ‘parallel plus’ behavior alleged in this case.”

Affirmed.

10-8037 In re: Text Messaging Antitrust Litigation

Petition for Interlocutory Appeal from the United States District Court for the Northern District of Illinois, Kennelly, J., Posner, J.

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