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The Supreme Court followed the advice of a Vanderbilt University professor and 25 other top antitrust economists and overturned the decision made by the Second Circuit Court of Appeals on the telecom antitrust lawsuit Bell Atlantic Corp. v. Twombly.
On Monday, the Supreme Court ruled that an antitrust suit filed under the Sherman Act cannot proceed without specific allegations showing that defendants participated in a conspiracy.
Luke Froeb, the William C. and Margaret W. Oehmig Associate Professor in Entrepreneurship and Free Enterprise at the Vanderbilt Owen Graduate School of Management and a group of economists filed an amicus brief with the Supreme Court arguing that pleading standards made it too easy to file antitrust cases.
In the lawsuit, William Twombly claimed that telephone and Internet service providers created after the breakup of AT&T, conspired with each other to block local competitors from certain service areas by agreeing not to compete over each other’s territories.
“The Second Circuit has taken antitrust enforcement in a misguided direction by adopting its ‘parallel behavior is enough’ standard,” said Froeb. “The fact of parallel behavior, standing alone, does not tend to exclude the possibility of independent action. Firms that compete with one another often behave like one another in at least some respects.”
In the amicus brief, Froeb cited the work of Vanderbilt University Distinguished Professor of Law, Economics and Management W. Kip Viscusi and Viscusi’s book Economics of Regulation & Antitrust.
Luke Froeb is also the former Director of the Bureau of Economics at the Federal Trade Commission.
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