OPINION
The plaintiff in this antitrust case is Pittsburgh’s second-largest hospital system. It sued Pittsburgh’s dominant hospital system and health insurer under the Sherman Act and state law. The plaintiff asserts that the defendants violated sections 1 and 2 of the Sherman Act by forming a conspiracy to protect one another from competition. The plaintiff says that pursuant to the conspiracy, the dominant hospital system used its power in the provider market to insulate the health insurer from competition, and in exchange the insurer used its power in the insurance market to strengthen the hospital system and to weaken the plaintiff. The plaintiff also asserts that the dominant hospital system violated section 2 of the Sherman Act by attempting to monopolize the Pittsburgh-area market for specialized hospital services. Finally, the plaintiff asserts state-law claims for unfair competition and tortious interference against the dominant hospital system. The District Court dismissed the Sherman Act claims and, having done so, declined to exercise supplemental jurisdiction over the state-law claims. Because we conclude that the District Court erred in dismissing the Sherman Act claims, we will reverse in part, vacate in part, and remand for further proceedings.
I. Facts
The following facts are alleged in the plaintiffs complaint. The District Court decided this case on a motion to dismiss. We accept as true the factual allegations in the complaint and draw all reasonable inferences in the plaintiffs favor. Re
vell v. Port Auth.,
A. Cast of Characters
This lawsuit involves three parties. The plaintiff West Penn Allegheny Health System, Inc. (‘West Penn”) is Pittsburgh’s second-largest hospital system; it has a share of less than 23% of the market for hospital services in Allegheny County, which includes the City of Pittsburgh. The defendant University of Pittsburgh Medical Center (“UPMC”) is Pittsburgh’s dominant hospital system. It enjoys a 55% share of the Allegheny County market for hospital services, and its share of *92 the market for tertiary and quaternary care services exceeds 50%. 1 West Penn and UPMC are the two major competitors in the Allegheny County market for hospital services, and are the only competitors in the market for tertiary and quaternary care services. The defendant Highmark, Inc. is the dominant insurer in the Allegheny County market for health insurance. 2 Highmark’s market share has remained between 60% and 80% since 2000.
B. Pre-Conspiracy Conduct
In 2000, The Western Pennsylvania Healthcare System merged with several financially distressed medical providers, including Allegheny General Hospital, to form West Penn. Highmark funded the merger with a $125 million loan. High-mark’s largesse did not spring from a sense of altruism but was intended to preserve competition in the market for hospital services. Had the financially distressed providers comprising West Penn failed, UPMC would have attained nearly unchecked dominance in the market. This would not have been good for Highmark: the more dominant UPMC becomes, the more leverage it gains to demand greater reimbursements from Highmark. (Reimbursements are the payments insurers give to providers to cover services rendered to the insurers’ subscribers.)
After the merger, Highmark and West Penn continued to enjoy a good relationship, as Highmark recognized that preserving West Penn was in its interests. Thus, Highmark encouraged investors to purchase bonds from West Penn, touting its financial outlook and the quality of its medical services. And in early 2002, High-mark gave West Penn a $42 million grant to invest in its facilities.
In contrast to Highmark, UPMC has been hostile to West Penn since its inception. UPMC opposed the merger creating West Penn: it intervened in the merger proceedings, filed an unsuccessful lawsuit to prevent Highmark from funding the merger, and attempted (with some success) to dissuade investors from purchasing West Penn bonds. UPMC’s hostility towards West Penn continued after the merger. Since West Penn’s formation, UPMC executives have repeatedly said that they want to destroy West Penn, and they have taken action to further that goal on more than a few occasions. But more on that later. See Section I.E, infra.
Historically, UPMC has also had a bitter relationship with Highmark. For example, when UPMC demanded purportedly excessive reimbursement rates from High-mark, Highmark responded by forming Community Blue, a low-cost insurance plan. To participate in Community Blue, a hospital had to agree to accept reduced reimbursements, but would receive a higher volume of patients. West Penn participated in Community Blue, but UPMC did not, claiming that its reimbursement rates were too low. UPMC responded to Community Blue by forming its own health insurer, UPMC Health Plan. UPMC Health Plan has been Highmark’s main *93 competitor in the Allegheny County market for health insurance since its formation.
Moreover, Highmark and UPMC have faced off in litigation in the past. In a 2001 federal lawsuit, Highmark sued UPMC under the Lanham Act, asserting that UPMC had made false statements about Community Blue in an advertisement. The District Court agreed with Highmark and preliminarily enjoined dissemination of the advertisement; we affirmed on appeal.
Highmark, Inc. v. UPMC Health Plan, Inc.,
C. The Conspiracy Begins; the Dynamics Change
In 1998, UPMC offered a “truce” to Highmark. Under the terms of the truce, each entity would use its market power to protect the other from competition. High-mark initially rejected UPMC’s offer, criticizing it as an illegal “attempt to form a ‘super’ monopoly for the provision of health care in Western Pennsylvania in which [UPMC], the leading provider of hospital services, and Highmark, the leading health insurer, would combine forces.” JA 95.
The complaint alleges, however, that in the summer of 2002, over the course of several meetings, Highmark reconsidered and decided to accept UPMC’s offer of a truce. The complaint alleges that UPMC agreed to use its power in the provider market to prevent Highmark competitors from gaining a foothold in the Allegheny County market for health insurance, and in exchange Highmark agreed to take steps to strengthen UPMC and to weaken West Penn. The complaint offers the following factual allegations in support of the conspiracy claim.
UPMC engaged in conduct that effectively insulated Highmark from competition. First, it refused to enter into competitive provider agreements with Highmark’s rivals. This prevented the rivals from entering the Allegheny County health insurance market because, given UPMC’s dominance, an insurer cannot succeed in the market without being able to offer a competitively-priced plan that includes UPMC as an in-network provider. 3
Second, UPMC shrunk UPMC Health Plan (Highmark’s main competitor in the insurance market). It cut the Health Plan’s advertising budget and increased its premiums, which led to a sharp drop in enrollment. It also refused to sell the Health Plan to insurers interested in buying it, which might have revived it as a Highmark competitor. UPMC acknowledged that it decided to shrink the Health Plan as a result of negotiations with High-mark, in which Highmark had agreed to take Community Blue off the market.
Meanwhile, Highmark took action that enhanced UPMC’s dominance. Most significantly, it paid UPMC supraeompetitive reimbursement rates. To afford UPMC’s reimbursements, Highmark had to increase its insurance premiums (which, according to West Penn, it was able to do without losing business because UPMC had insulated it from competition). High-mark, moreover, provided UPMC with *94 $230 million to build a new facility for its children’s hospital, $70 million of which was a grant and the remainder of which was a low-interest loan. In addition, High-mark vowed not to offer a health plan that did not include UPMC as an in-network provider. Thus, in 2004, Highmark eliminated its low-cost insurance plan, Community Blue, in which UPMC had declined to participate. With the elimination of a leading low-cost insurance plan, health insurance premiums in Allegheny County rose. Furthermore, in 2006, Highmark publicly supported UPMC’s acquisition of Mercy Hospital, which, other than West Penn, was UPMC’s only other competitor in the market for tertiary and quaternary care services. Finally, in 2006, Highmark leaked confidential financial information regarding West Penn to UPMC, “which in turn leaked a distorted version of the information to credit-rating agencies and to the business media in an attempt to destroy investor confidence in West Penn.” JA 113.
In addition, Highmark essentially cut West Penn off from its financial support, thus hampering its ability to compete with UPMC. Highmark, for instance, repeatedly rejected West Penn’s requests to refinance the $125 million loan that was used to fund the 2000 merger. 4 Although Highmark believed refinancing the loan made business sense, it declined to do so out of fear that UPMC would retaliate against it for violating their agreement— an agreement that Highmark candidly admitted was “probably illegal.” Highmark said that it was under a “constant barrage” from UPMC and that UPMC was “obsessed” with driving West Penn out of business. Highmark explained that if it helped - West Penn financially, UPMC would allow one of Highmark’s competitors to enter the Allegheny County insurance market or would sell UPMC Health Plan to a Highmark competitor. Indeed, UPMC had sent Highmark a letter containing such a warning. JA 107-09.
Moreover, Highmark maintained West Penn’s reimbursement rates at artificially depressed levels and repeatedly refused to increase them. In 2005 and 2006, for example, West Penn asked Highmark for a general increase in its rates, which were originally set in 2002. Highmark initially acknowledged that West Penn’s rates were too low and suggested that it would raise them, but it ultimately refused to follow through, explaining that it could not help West Penn because, if it did, UPMC would retaliate.
Finally, Highmark “discriminated against West Penn [] in the award of grants to improve the quality of medical care in” Allegheny County. In November 2005, for example,
Highmark launched a program to provide grant dollars to improve the implementation of information technology in health care. The program provided for grants of $7,000 per physician, with an aggregate limit of $500,000 per health system. Only two health systems in Western Pennsylvania employed enough physicians to be limited by the $500,000 cap: UPMC and West Penn [ ]. High-mark waived the cap in UPMC’s case, awarding a grant of $8 million. [But] Highmark consistently refused to raise the cap for West Penn....
JA 113.
D. The Effects of the Conspiracy
The conspiracy ended in 2007, when the Antitrust Division of the Department of Justice began investigating Highmark’s *95 and UPMC’s relationship. During the years covered by the conspiracy, UPMC and Highmark reaped record profits. UPMC’s net income rose from $23 million in 2002 to over $618 million in 2007, and Highmark’s net income rose from $50 million in 2001 to $398 million in 2006. UPMC’s increased revenue came largely from the “sweetheart” reimbursements it received from Highmark, and Highmark increased its earnings by raising premiums. 5 On the other hand, West Penn struggled during the years covered by the conspiracy. It was forced to scale back its services, and to abandon projects to expand and improve its services and facilities. In essence, West Penn was unable to compete with UPMC as vigorously as it otherwise would have.
E. UPMC’s Unilateral Conduct
Besides the conspiracy with Highmark, UPMC has taken a number of actions on its own to weaken West Penn. Most significantly, UPMC has systematically “raided” key physicians from West Penn. Even before West Penn’s formation, UPMC hired physicians, including neurosurgeons, oncologists, hand surgeons, cardiologists, gastroenterologists, pulmonologists, and primary care physicians from two of West Penn’s predecessor hospitals, including Allegheny General. UPMC lured these physicians away by paying them salaries that were well above market rates. Although UPMC incurred financial losses because of the hirings (that is, it paid the physicians more money than they generated), it admitted that it was willing to do so in order to injure the hospitals.
UPMC’s physician “raiding” has “continued unabated” since West Penn’s formation. JA 117. ■ In 2002, UPMC attempted to hire the entire anesthesiology staff of a West Penn hospital. UPMC did so even though its internal analysis showed that the raid would be unprofitable. As before, though, UPMC admitted that it was not trying to earn profits. It was trying to drive the hospital out of business. In the end, the anesthesiologists were lured away by UPMC’s bloated salary offers. But they quit not long after joining UPMC, because UPMC lacked sufficient operating space to absorb them.
The complaint identifies many additional examples of so-called physician raiding. In 2003, UPMC hired two primary care practitioners from a West Penn hospital; UPMC admitted that it took the practitioners on in order to injure the hospital. In 2005, UPMC hired a surgical group from a West Penn hospital. In 2006, UPMC hired a radiologist, an orthopedic surgeon, a cardiovascular surgeon, and an entire vascular lab department from West Penn. UPMC was unable to absorb the cardiovascular surgeon and vascular lab staff. In 2008, UPMC took cardiovascular surgeons, cardiologists, and nine primary care physicians from West Penn. UPMC agreed to pay one of the primary care physicians roughly $500,000 — a figure well above the revenue generated by the physician’s practice and more than four times the salary he received at West Penn. In 2009, UPMC offered Allegheny General’s key bariatric surgeon a bloated salary in an attempt to hire him away. In an internal email to UPMC’s CEO, a UPMC executive said that if the surgeon joined UPMC, “[Allegheny General] will not have a sustainable bariatrics program unless they just merge it with [West Penn].” *96 The executive also said that even if Allegheny General raised the surgeon’s salary and persuaded him to stay, at least UPMC “will have forced [Allegheny General] to incur higher costs.” JA 120-21. The surgeon ended up leaving Allegheny General to join UPMC.
In other instances, UPMC tried unsuccessfully to lure physicians away from West Penn. Between 2002 and 2009, UPMC attempted to hire a cardiology group, a urology group, an anesthesiology staff, a radiology staff, a “premier podiatrist,” and an endocrinology group from West Penn. UPMC did not need the additional physicians, and although the doctors remained with West Penn, they did so only after West Penn agreed to increase their salaries.
In addition to hiring physicians away from West Penn, UPMC has pressured community hospitals into entering joint ventures with it for the provision of oncology services. UPMC told the hospitals that unless they entered the joint ventures, it would build UPMC satellite facilities next to them, draining their business. Nearly every community hospital in the Pittsburgh metropolitan area (except those owned by West Penn) acquiesced and entered a joint venture with UPMC. These joint ventures function as exclusive-dealing arrangements, i.e., the community hospitals refer all of their oncology patients to UPMC facilities. Moreover, under pressure from UPMC, many of the community hospitals have begun sending all of their tertiary and quaternary care referrals to UPMC facilities.
Finally, UPMC has repeatedly made false statements about West Penn’s financial health in order to discourage investors from purchasing West Penn bonds. On one occasion, for example, UPMC disseminated “a book of false and defamatory information about West Penn[’s] finances that was printed in a format designed to appear as if it were authored by West Penn.” JA 122. The book, which was distributed to investment bankers and credit-rating agencies, gave investors a distorted impression of West Penn’s financial stability. On the whole, UPMC’s efforts to forestall investment in West Penn were somewhat successful. Although West Penn has been able to issue debt when necessary, UPMC’s disparagement has caused it to pay artificially inflated financing costs on the debt.
II. Procedural History
On April 21, 2009, West Penn initiated this lawsuit in the United States District Court for the Western District of Pennsylvania. UPMC and Highmark filed motions to dismiss, but West Penn sought and was granted leave to submit an amended complaint, which it filed on August 28, 2009. The amended complaint (hereafter, “the complaint”) includes five counts. Counts 1 and 2 assert that UPMC and Highmark violated sections 1 and 2 of the Sherman Act, respectively, by conspiring to protect one another from competition. Count 3 alleges that UPMC violated section 2 of the Sherman Act by attempting to monopolize the Allegheny County market for “acute care inpatient services,” or, in the alternative, the Allegheny County market for “high-end tertiary and quaternary acute care inpatient services.” JA 126. (For simplicity’s sake, we will refer to the two collectively as the market for “specialized hospital services.”) Counts 4 and 5 assert state-law claims against UPMC for unfair competition and tortious interference with business relations. The complaint requests damages, including treble and punitive damages, and injunctive relief, including an order requiring High-mark to “end any discrimination in reim *97 bursement (both direct and indirect) between UPMC and West Penn.” JA 142.
On September 18, 2009, UPMC and Highmark filed renewed motions to dismiss. The defendants moved to dismiss the conspiracy claims on three bases. They argued (1) that the complaint fails adequately to allege an unlawful conspiracy, (2) that even if it does allege a conspiracy, it fails to allege that West Penn sustained an “antitrust injury” as a result of the conspiracy, and (3) that the conspiracy claims are time-barred.
UPMC urged the Court to dismiss the attempted monopolization claim on the ground that the complaint fails to allege “anticompetitive conduct,” an element of such a claim. Finally, UPMC argued that if the Court dismissed the Sherman Act claims, it should decline to exercise supplemental jurisdiction over the state-law claims.
On October 29, 2009, the District Court issued a lengthy opinion dismissing the complaint in its entirety. First, the Court discussed the pleading standard that applies in complex cases, including in antitrust cases. Noting that discovery in complex cases is expensive and time-consuming, the Court stated that judges presiding over such cases have a duty to act as “gatekeepers.” Although the Court did not elaborate on what it meant by this, it suggested that, in order to prevent complex cases lacking merit from proceeding to discovery, courts must subject pleadings in such cases to heightened scrutiny. After discussing the pleading standard— and taking on the role of gatekeeper — the Court proceeded to address the merits.
The Court dismissed the conspiracy claims on the ground that the complaint fails to allege a conspiracy. According to the Court, the complaint “is long on innuendo and frequently repeats the buzz word that the defendants ‘conspired,’ ” but ultimately fails to allege “any facts which evidence a concerted action.” JA 55. The Court also concluded that the conspiracy claims are deficient because the complaint fails to allege that West Penn sustained an antitrust injury as a consequence of the conspiracy. With respect to the attempted monopolization claim, the Court agreed with UPMC that the complaint fails to allege anticompetitive conduct. Finally, after dismissing the federal claims, the Court declined to exercise supplemental jurisdiction over the state-law claims. 6
West Penn filed this timely appeal.
III. Jurisdiction and Standard of Review
The District Court had jurisdiction over the Sherman Act claims under 28 U.S.C. §§ 1331 and 1337(a), and supplemental jurisdiction over the state-law claims under 28 U.S.C. § 1367(a). This Court has jurisdiction under 28 U.S.C. § 1291. Our review of a district court’s ruling on a motion to dismiss is plenary.
Jones v. ABN Amro Mortg. Grp., Inc.,
*98 IV. The Pleading Standard
Under Federal Rule of Civil Procedure 8, a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” In
Bell Atlantic Corp. v. Twombly,
The District Court opined that judges presiding over antitrust and other complex cases must act as “gatekeepers,” and must subject pleadings in such cases to heightened scrutiny. The District Court’s gloss on Rule 8, however, is squarely at odds with Supreme Court precedent. Although
Twombly
acknowledged that discovery in antitrust cases “can be expensive,”
It is, of course, true that judging the sufficiency of a pleading is a context-dependent exercise.
See Iqbal,
We conclude that it is inappropriate to apply Twombly’s plausibility standard with extra bite in antitrust and other complex cases. We now turn to address whether West Penn’s complaint satisfies the plausibility standard.
*99 V. The Conspiracy Claims
West Penn asserts conspiracy claims under sections 1 and
2
of the Sherman Act, 15 U.S.C. §§ 1 and 2. Section 1 provides that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States ... is declared to be illegal.” Despite its seemingly absolute language, section 1 has been construed to prohibit only
unreasonable
restraints of trade.
Standard Oil Co. v. United States,
Section 2 imposes liability on “[e]very person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States.” 15 U.S.C. § 2;
see also Howard Hess,
UPMC and Highmark defend the District Court’s dismissal of the conspiracy claims on several bases. We address each in turn.
A. Agreement
First, we address the defendants’ argument that the conspiracy claims were properly dismissed because the complaint fails to allege an agreement. To prevail on a section 1 claim or a section 2 conspiracy claim, a plaintiff must establish the existence of an agreement, sometimes also referred to as a “conspiracy” or “concerted action.”
Twombly,
A plaintiff may plead an agreement by alleging direct or circumstantial evidence, or a combination of the two. If a complaint includes non-conclusory allegations of direct evidence of an agreement, a court need go no further on the question whether an agreement has been adequately pled.
Ins. Brokerage,
West Penn’s theory on the conspiracy claims is that in the summer of 2002, UPMC and Highmark formed an agreement to protect one another from competition. West Penn asserts that UPMC agreed to use its power in the provider market to exclude Highmark’s rivals from the Allegheny County health insurance market, and that in exchange Highmark agreed to take steps to strengthen UPMC and to weaken its primary rival, West Penn. We conclude that the complaint contains non-conclusory allegations of direct evidence of such an agreement.
The complaint alleges that in 2005, West Penn asked Highmark to refinance the loan that was used to fund the 2000 merger, that Highmark agreed that refinancing was a good idea, but that Highmark would not sign off on the refinancing. Highmark explained that if it helped West Penn out financially, UPMC, which was “obsessed” with driving West Penn out of business, would retaliate against it for violating their agreement — an agreement that Highmark admitted was “probably illegal.” Indeed, UPMC had sent Highmark a letter warning that if it extended financial assistance to West Penn, UPMC would enter a provider agreement with a Highmark competitor, thus reducing Highmark’s dominance in the insurance market. The complaint also alleges that in 2005 and 2006, West Penn asked Highmark to increase its reimbursement rates, that Highmark acknowledged that the rates were too low and suggested that it would raise them, but that Highmark refused to follow through, explaining that if it increased West Penn’s rates, UPMC would retaliate against it for violating their agreement. Finally, the complaint alleges that at an employees’ meeting, UPMC’s CEO admitted that he decided to shrink UPMC Health Plan as a result of “negotiations” with Highmark, during which Highmark had agreed to take Community Blue off the market. In all, these allegations of direct evidence are sufficient to survive a motion to dismiss on the agreement element.
See Ins. Brokerage,
B. Unreasonable Restraint
The defendants make a half-heart-ed argument that even if the complaint alleges that they formed a conspiracy to shield one another from competition, the section 1 claim is still deficient because the complaint does not allege that the conspiracy unreasonably restrained trade. We disagree. At the pleading stage, a plaintiff may satisfy the unreasonable-restraint element by alleging that the conspiracy produced anticompetitive effects in the relevant markets.
See Howard Hess,
Here, the complaint alleges that the relevant markets are, on one hand, the Allegheny County market for specialized hospital services and, on the other hand, the Allegheny County market for health insurance. 9 The complaint plausibly sug *101 gests that by denying West Penn capital, the conspiracy caused West Penn to cut back on its services (including specialized hospital services) and to abandon projects to expand and improve its services and facilities. The complaint also plausibly suggests that by shielding Highmark from competition, the conspiracy resulted in increased premiums and reduced output in the market for health insurance. These allegations are sufficient to suggest that the conspiracy produced anticompetitive effects in the relevant markets. 10
C. Antitrust Injury
[15] We now turn to the defendants’ argument that the conspiracy claims were properly dismissed on the ground that the complaint fails to allege antitrust injury. In
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
The antitrust-injury requirement helps ensure “that the harm claimed by the plaintiff corresponds to the rationale for finding a violation of the antitrust laws in the first place, and it prevents losses that stem from competition from supporting suits by private plaintiffs for ... damages.”
Atl. Richfield,
So, for example, in
Brunswick,
a group of bowling alleys sued a manufacturer of bowling equipment, claiming that the latter’s acquisition of several financially distressed alleys violated the antitrust laws.
As a general matter, the class of plaintiffs capable of satisfying the antitrust-injury requirement is limited to consumers and competitors in the restrained market,
Carpet Group Int’l v. Oriental Rug Imps. Ass’n, Inc.,
West Penn asserts that three aspects of the conspiracy caused it antitrust injury. First, West Penn says it was injured as a result of Highmark’s decision to take Community Blue off the market. It explains that Community Blue subscribers often received treatment at West Penn hospitals and that it lost business when Community Blue was eliminated. West Penn’s injury in this regard, however, is not
antitrust
injury. As West Penn seems to acknowledge, Highmark’s elimination of Community Blue violated the antitrust laws, if at all, because it tended to reduce competition in the Allegheny County market for health insurance and thus tended to cause, among other things, an increase in premiums. West Penn participates in the insurance market not as a consumer or a competitor but as a supplier — it sells hospital services to insurers. A supplier does not suffer an antitrust injury when competition is reduced in the downstream market in which it sells goods or services.
Schuylkill Energy Res., Inc. v. Pa. Power & Light Co.,
Second, West Penn alleges that it sustained an antitrust injury based on Highmark’s refusals to refinance the $125 million loan. It explains that Highmark’s refusals caused it to incur inflated financing costs, which in turn deprived it of capital that it would have used to improve and expand its medical facilities. But even if Highmark would not refinance the loan, the loan agreement allowed West Penn to obtain financing elsewhere and to repay the loan early without penalty.
11
In fact, West Penn did so in 2007. Because High-mark was just one of many possible sources of financing, we conclude that — ■
*103
even if it acted with anticompetitive motives — Highmark’s refinancing refusals could not have been
“competition-reducing
aspect[s] ... of the” conspiracy,
Atl. Richfield,
Finally, West Penn argues that it sustained an antitrust injury in the form of artificially depressed reimbursement rates. The complaint alleges that during the conspiracy, West Penn asked Highmark to renegotiate and raise its rates. The complaint suggests that Highmark acknowledged that the rates were too low and initially agreed to raise them, but that Highmark refused to follow through, citing its agreement with UPMC, under which it was not to do anything to benefit West Penn financially. West Penn asserts that the amount of the underpayments — i.e., the difference between the reimbursements it would have received in a competitive market and those it actually received — constitutes an antitrust injury. For their part, the defendants do not take issue with West Penn’s suggestion that its reimbursement rates would have been greater absent the conspiracy. They argue, instead, that paying West Penn depressed reimbursement rates was not an element of the conspiracy that posed antitrust problems. They reason that low reimbursement rates translate into low premiums for subscribers, and that it would therefore be contrary to a key purpose of the antitrust laws — promoting consumer welfare — to allow West Penn to recover the amount of the underpayments. West Penn has it right.
Admittedly, had Highmark been acting alone, West Penn would have little basis for challenging the reimbursement rates. A firm that has substantial power on the buy side of the market
(i.e.,
monopsony power) is generally free to bargain aggressively when negotiating the prices it will pay for goods and services.
Kartell v. Blue Shield of Mass., Inc.,
But when a firm exercises monopsony power pursuant to a conspiracy, its conduct is subject to more rigorous scrutiny,
see Am. Needle,
Here, the complaint suggests that High-mark has substantial monopsony power. It alleges that Highmark has a 60%-80%
*104
share of the Allegheny County market for health insurance, that there are significant entry barriers for insurers wishing to break into the market (including UPMC’s unwillingness to deal competitively with non-Highmark insurers), and that medical providers have very few alternative purchasers for their services.
12
The complaint also alleges that Highmark paid West Penn depressed reimbursement rates, not as a result of independent decisionmaking, but pursuant to a conspiracy with UPMC, under which UPMC insulated Highmark from competition in return for Highmark’s taking steps to hobble West Penn. In these circumstances, it is certainly plausible that paying West Penn depressed reimbursement rates unreasonably restrained trade. Such shortchanging poses competitive threats similar to those posed by conspiracies among buyers to fix prices,
see Mandeville Island Farms v. Am. Crystal Sugar Co.,
The defendants argue, though, that Highmark’s paying West Penn depressed reimbursements did not pose antitrust problems because it enabled Highmark to set low insurance premiums and thus benefited consumers. We disagree. First, even if it were true that paying West Penn depressed rates enabled Highmark to offer lower premiums, it is far from clear that this would have benefited consumers, because the premium reductions would have been achieved only by taking action that tends to diminish the quality and availability of hospital services.
See Brown,
*105
But most importantly, the defendants’ argument reflects a basic misunderstanding of the antitrust laws. The Ninth Circuit’s discussion in
Knevelbaard Dairies v. Kraft Foods, Inc.,
The fallacy of th[e defendants’] argument becomes clear when we recall that the central purpose of the antitrust laws ... is to preserve competition. It is competition — not the collusive fixing of prices at levels either low or high — that these statutes recognize as vital to the public interest. The Supreme Court’s references to the goals of achieving “the lowest prices, the highest quality and the greatest material progress,” [N. Pac. Ry. Co. v. United States,356 U.S. 1 , 4,78 S.Ct. 514 ,2 L.Ed.2d 545 (1958) ], and of “assuring] customers the benefits of price competition,” [Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters,459 U.S. 519 , 538,103 S.Ct. 897 ,74 L.Ed.2d 723 (1983) ], do not mean that conspiracies among buyers to depress acquisition prices are tolerated. Every precedent in the field makes clear that the interaction of competitive forces, not price-rigging, is what will benefit consumers.
Id.; see also Mandeville,
Having concluded that paying West Penn artificially depressed reimbursement rates was an anticompetitive aspect of the alleged conspiracy, it follows that the underpayments constitute an antitrust injury.
See Atl. Richfield,
D. Statute of Limitations 13
Highmark argues that the conspiracy claims are time-barred. Under 15 U.S.C. § 15b, a suit to recover damages for a violation of the Sherman Act must be “commenced within four years after the cause of action accrued.” In
Zenith Radio Corp. v. Hazeltine Research, Inc.,
West Penn initiated this lawsuit on April 21, 2009, and so the limitations period extends back to April 21, 2005.
See
15 U.S.C. § 15b. The complaint adequately alleges that the defendants performed injurious acts in furtherance of the conspiracy within the limitations period. The complaint alleges, for example, that as part of the conspiracy, Highmark refused to increase West Penn’s reimbursement rates in 2006. On a straightforward reading of
Zenith,
it therefore appears that West Penn may, consistent with the statute of limitations, recover damages for the acts that occurred within the limitations period.
See
Highmark acknowledges all of this, but urges us to adopt a limitation on
Zenith.
Citing persuasive authority, Highmark asks us to hold that no cause of action accrues based on injurious acts .that occur within the limitations period, if those acts are merely “reaffirmations” of acts done or decisions made outside the limitations period.
See
Highmark Br. at 38-46 (citing,
e.g., Grand Rapids Plastics, Inc. v. Lakian,
We start with
Hanover Shoe.
There, a shoe manufacturer sued a shoemaking machinery company for monopolization under section 2 of the Sherman Act. The manufacturer asserted that in 1912, the machinery company had established a lease-only policy for its most important equipment, under which it would lease — but would not sell — the equipment to manufacturers.
[The machinery company] has ... advanced the argument that because the earliest impact on [the manufacturer] of [the machinery company’s] lease only policy occurred in 1912, [the manufacturer’s] cause of action arose during that year and is now barred by the applicable ... statute of limitations.... [But w]e are not dealing with a violation which, if it occurs at all, must occur within some specific and limited time span.... Rather, we are dealing with conduct which *107 constituted a continuing violation of the Sherman Act and which inflicted continuing and accumulating harm on [the manufacturer]. Although [the manufacturer] could have sued in 1912 for the injury then being inflicted, it was equally entitled to sue in 1955.
Id.
at 502 n. 15,
Our decision in
Lower Lake Erie
is along the same lines. There the plaintiffs, which included docking and transportation companies, sued a railroad under section 1 of the Sherman Act. The companies proved that the defendant had participated in a conspiracy among railroads to exclude the companies from the market for the handling and transportation of iron ore.
Finally, we note that the policies underlying limitations statutes — namely, providing potential defendants with repose and avoiding prejudice caused by lost evidence, faded memories, and unavailable witnesses,
see Wilson v. Garcia,
[Adopting the defendant’s rule] would ... improperly transform the limitations statute from one of repose to one of continued immunity. For according to [the defendant’s] argument, a plaintiff who suffers [damage from a continuing antitrust violation] is barred not only *108 from proving violations and damages more than four years old, but is barred forever from complaining of [the continuation] of the unlawful conduct. The function of the limitations statute is simply to pull the blanket of peace over acts and events which have themselves already slept for the statutory period, thus barring the proof of wrongs embedded in time-passed events. Employing the limitations statute additionally to immunize recent repetition or continuation of violations and damages occasioned thereby not only extends the statute beyond its purpose, but also conflicts with the policies of vigorous enforcement of private rights through private actions.
We thus end up where we started: Zenith should be applied on its terms. Under Zenith, West Penn’s conspiracy claims are not time-barred because the complaint adequately alleges that the defendants performed injurious acts in furtherance of the conspiracy within the limitations period.
VI. The Attempted Monopolization Claim
In addition to the conspiracy claims, West Penn alleges that UPMC violated section 2 of the Sherman Act by attempting to monopolize the Allegheny County market for specialized hospital services. The elements of attempted monopolization are (1) that the defendant has a specific intent to monopolize, and (2) that the defendant has engaged in anticompetitive conduct that, taken as a whole, creates (3) a dangerous probability of achieving monopoly power.
Spectrum Sports, Inc. v. McQuillan,
Broadly speaking, a firm engages in anticompetitive conduct when it attempts “to exclude rivals on some basis other than efficiency,”
Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,
“‘Anticompetitive conduct’ can come in too many different forms, and is too dependent upon context, for any court or commentator ever to have enumerated all the varieties.”
LePage’s,
The complaint alleges the following anticompetitive conduct. First, the defendants engaged in a conspiracy, a purpose of which was to drive West Penn out of business. Second, UPMC hired employees away from West Penn by paying them bloated salaries. UPMC admitted to hiring some of the employees not because it needed them but in order to injure West Penn; UPMC could not absorb some of the employees and had to let them go; and UPMC incurred financial losses as a result of the hiring. These allegations are sufficient to suggest that at least some of the hirings were anticompetitive.
See Universal Analytics,
Viewed as a whole, these allegations plausibly suggest that UPMC has engaged in anticompetitive conduct,
ie.,
that UPMC has competed with West Penn “on some basis other than the merits.”
Le-Page’s,
VII. The State-Law Claims
After dismissing the federal claims, the District Court declined to exercise supplemental jurisdiction over the state-law claims. Having determined that the federal claims were improperly dismissed, we will vacate the dismissal of the state-law claims for reconsideration by the District Court.
VIII. Conclusion
For the reasons set forth above, the judgment of the District Court will be reversed in part and vacated in part, and the case will be remanded for further proceedings.
Notes
. "Tertiary care” refers to highly sophisticated, specialized care. See Highmark Br. at 3 n. 1. "Quaternary care” refers to "advanced levels of medicine which are highly specialized and not widely used.” Id. at 4 n. 2.
. Specifically, the relevant market with respect to Highmark is alleged to be the Allegheny County market for "health care financing and administration for private employers and individuals, including indemnity insurance, managed care products such as HMO, PPO, or POS plans, and third-party administration of employer self-funded health plans.” JA 129. But in their briefs the parties have referred to this market as the Allegheny County market for health insurance, and we do the same.
. In fact, United Healthcare tried to enter the Allegheny County insurance market in 2005 and 2006, but it was effectively prevented from doing so because UPMC would not offer it a competitive contract.
. Even so, the loan agreement allowed West Penn to obtain financing elsewhere and to repay the loan early, which West Penn did in 2007. See JA 710-11.
. For example, from 2002-2006, "health insurance premiums for single individuals in the Pittsburgh area rose approximately 55% and health insurance premiums for Pittsburgh families rose approximately 51%.” JA 105. The increases in nearby regions were much lower.
. In reaching its decision, the District Court relied heavily on evidence extrinsic to the complaint. The general rule, of course, is that "a district court ruling on a motion to dismiss may not consider matters extraneous to the pleadings.”
In re Burlington Coat Factory Sec. Litig.,
. Commentators have noted that, to the extent it bans
conspiracies
to monopolize, section 2 is largely superfluous, as conspiracies to monopolize will usually — if not always— run afoul of section l’s prohibition of conspiracies that unreasonably restrain trade.
See, e.g.,
Mark T.L. Sargent,
Economics Upside-Down: Low-Price Guarantees as Mechanisms for Facilitating Tacit Collusion,
141 U. Pa. L.Rev. 2055, 2109 (1993). Even so, the fact that Congress created a redundant cause of action is not a basis for dismissal.
See JTC Petroleum Co. v. Piasa Motor Fuels, Inc.,
. Because we conclude that the allegations of direct evidence are by themselves sufficient, we do not address the sufficiency of the circumstantial allegations.
See Ins. Brokerage,
. The defendants do not challenge West Penn's definition of the relevant markets.
. In so concluding, we do not reach West Penn’s argument that — given the horizontal aspect of the conspiracy, i.e., UPMC's agreement to shrink UPMC Health Plan — the conspiracy is subject to per se condemnation. Even if the more demanding rule of reason applies, the complaint adequately alleges that the conspiracy stifled competition in the relevant markets.
. Although this case is considered on a motion to dismiss, the loan agreement may be reviewed because it is integral to the complaint.
Burlington Coat,
. Indeed, the complaint alleges that the only other insurer with a significant market share is UPMC Health Plan, and that UPMC Health Plan has basically been unwilling to deal with West Penn.
. Although Federal Rule of Civil Procedure 8(c) suggests that "a statute of limitations defense cannot be used in the context of a Rule 12(b)(6) motion to dismiss,”
Oshiver v. Levin, Fishbein, Sedran & Berman,
. We previously recognized — though perhaps in overly broad terms — that making false statements about a rival, without more, rarely interferes with competition enough to violate the antitrust laws.
See Santana Prods., Inc. v. Bobrick Washroom Equip., Inc.,
. UPMC argues that we may not consider hirings made outside the limitations period in determining whether the new hirings were anticompetitive. Not so.
Toledo Mack,
. West Penn also claims that UPMC's acquisition of Mercy Hospital was anticompetitive. It says that, besides West Penn, Mercy was UPMC's only other competitor in the market for specialized hospital services, and that the acquisition brought UPMC one step closer to monopoly. As UPMC points out, however, West Penn has failed to allege that it sustained an antitrust injury as a result of the acquisition, and thus may not challenge it.
See Alberta Gas,