Antitrust’s heightened profile in higher education
Along with other Hausfeld attorneys speaking at this year’s Spring Meeting of the American Bar Association’s Antitrust Law Section (attended by over 3,700 lawyers, economists, and others), I was fortunate to moderate an “educational” panel – literally, in my circumstances, one focused on antitrust issues arising in higher education. While many may view colleges and universities as non-profit institutions or ivory towers removed from marketplace concerns of the antitrust laws, that has been anything but the case, particularly over the past decade. Cases involving admissions, scholarships, athlete compensation, and no-poach agreements concerning graduate school faculties, as well as monopolization claims involving markets ranging from textbooks and college bookstores to local housing, have been rife with competition concerns. Surveyed briefly below are just a few of the leading cases of interest discussed by the panelists, in most instances from first-hand experience.
At the threshold stage, parents and students alike today benefit from The Common Application’s “Common App” that applicants may use to apply to over 1,000 member colleges and universities throughout the United States, allowing them to apply to multiple schools at once. While there are still some public and private schools (and particularly military and religious academies) that have not embraced the Common App, the efficiencies versus the days of bespoke applications are obvious. However, CollegeNET, Inc., which creates software to process college applications, sued The Common Application in 2014 for maintaining an unlawful monopoly. CollegeNET alleged that the Common App’s widespread use limited college choice, decreased the scope of service and price competition available to applicants, and foreclosed rivals from entry to the “application processing” market. The district court initially dismissed the lawsuit for failure to state antirust injury, but the parties settled in 2019 following a Ninth Circuit reversal of that dismissal.
Even before potential students apply, though, competition issues may arise. In 2018, the Department of Justice (DOJ) began an investigation of the National Association for College Admission Counseling (NACAC) concerning provisions in its code of ethics prohibiting members from offering incentives to students who applied for early admission, recruiting students who had committed to other institutions, and soliciting transfer applications from a prior year’s applicant pool when the inquiry was not initiated by the student. The following year, the DOJ reached a consent settlement in which the NACAC agreed to removing certain of these provisions (and increasing antitrust compliance training among its members).
Another key issue at the matriculation stage is the level and availability of scholarships. In 1989, the DOJ filed a civil antitrust case against the “Ivy Overlap Group,” which was a group of universities that were alleged to have employed the same analysis to compute family contributions toward the costs of attendance, for purposes of collectively determining financial assistance offered to commonly admitted students. The case resulted in a 10-year consent decree in 1991, under which the universities committed not to agree on student financial aid and, on a more lasting level, led to Congress passing what has been colloquially referred to as the “568 Exemption” (Section 568 of the Improving America’s Schools Act of 1994), which has permitted colleges to formulate common approaches to awarding financial aid without violating the antitrust laws, so long as they strictly adhere to need-blind admissions. (The 568 Exemption expired on September 30, 2022, and was not renewed by Congress.)
In a lawsuit now known as Henry v. Brown University, filed last year and currently pending in federal court in the Northern District of Illinois, current and former college students allege in a class action complaint that members of a “568 Presidents Group” of universities conspired to eliminate competition among them for financial aid, allegedly effectively fixing the price of college attendance among those universities. Judge Matthew Kennelly declined to dismiss the suit on the basis of immunity under Section 568, finding the plaintiffs’ allegations sufficient at the pleading stage. Judge Kennelly rejected arguments from the universities that strict interpretation of the phrase ”without regard to the [applicant’s] financial circumstances” would preclude them from doing so in a positive way to shape economically diverse classes. Judge Kennelly also rejected the universities’ argument that each of them must have been alleged to have considered financial need in admissions decisions, concluding that if even one school among the seventeen plausibly was alleged not to have been need-blind in its admissions, none would be entitled to immunity under Section 568. The case has been filled with heated discovery disputes, and last month, the class plaintiffs announced that the first settlement in principle had been reached, with the University of Chicago.
Perhaps the most famous antitrust cases involving colleges and universities have been those challenging use of the name, image and likeness of college athletes (so-called “student-athletes”) and limitations on payments to them. In the landmark O’Bannon decision, a federal appellate court (the Ninth Circuit) held for the first time that a college athlete eligibility rule of the National Collegiate Athletic Association (NCAA) unreasonably restrained trade in violation of Section 1 of the Sherman Act – a decision familiar to many readers here because the Hausfeld firm successfully represented the class plaintiffs. After O’Bannon opened the door to full cost-of-attendance scholarships, further class action litigation in front of presiding Judge Claudia Wilken resulted in striking down additional NCAA restrictions on providing college athletes with non-cash compensation for academic-related purposes, ultimately upheld unanimously by the Supreme Court in the Alston decision. Further class action litigation against the NCAA and the five Power 5 athletic conferences now seeks treble damages for retroactive educational payments dating back to 2018 on behalf of current and former Division I college athletes.
And additional frontiers in antitrust challenges to practices among colleges and universities continue to open up. In Choh & Kirk v. Brown University, filed in federal court in Connecticut in March 2023, a former Brown men’s basketball player and a current member of Brown’s women’s basketball team alleged in a class action (potentially implicating more than 10,000 college athletes) that the Council of Ivy League Presidents and their eight member schools (Brown, Columbia, Cornell, Dartmouth, Harvard, Penn, Princeton, and Yale) have unlawfully conspired not to pay Ivy League athletes any compensation or reimburse them for education-related expenses. Of the over 350 colleges and universities whose students participate in Division I athletics, according to the plaintiffs’ complaint, the Ivy League is an outlier as a conference enforcing an agreement not to offer athletic scholarships. The plaintiffs claim that the alleged agreement is unlawful per se or, alternatively, unreasonably restrains trade. If the case proceeds under the rule of reason, of course, it potentially raises fascinating issues of market definition and asserted procompetitive justifications – considering that academically elite schools such as Stanford, Duke, and Notre Dame do not have the restraints alleged against the Ivy League schools. (Indeed, in a motion to dismiss filed only days ago, the defendants argued, among other things, that per se analysis would be inappropriate and that plaintiffs had failed to plausibly allege any properly defined market limited to Ivy League schools.)
None of these issues are easy ones, of course, but one key point of agreement among the panelists and many audience members – who have personally confronted college costs, particularly among private schools, that have far outpaced inflation – is that higher education can no longer be overlooked in enforcement of the competition laws.
*Scott Martin is Co-Chair of Hausfeld's Antitrust Practice and Partner in the New York office.
 Our panelists, representing litigators of marquee cases in the subject matter from both plaintiff and defense perspectives, were Heather Burke, White & Case; Robert Gilbert, Gilbert Litigators & Counselors; Jeanifer Parsigian, Winston & Strawn; and Rohit Singla, Munger Tolles & Olson.
 As substantial economic enterprises, institutions of higher learning also face a host of competition counseling issues outside of litigation – e.g., sharing of salary information, joint buying arrangements, shared trustees, and licensing of intellectual property rights, among others.
 CollegeNET, Inc. v. Common Application, Inc., 711 F. App’x 405 (9th Cir. 2017).
 See generally DOJ Press Release, “Justice Department Files Antitrust Case and Simultaneous Settlement Requiring Elimination of Anticompetitive College Recruiting Restraints,” December 19, 2019, available at https://www.justice.gov/opa/pr/justice-department-files-antitrust-case-and-simultaneous-settlement-requiring-elimination.
 Specifically, the lawsuit names as defendants Brown University and sixteen other top private universities and colleges.
 Carbone v. Brown Univ., 2022 WL 3357249 (N.D. Ill. Aug. 15, 2022).
 O’Bannon v. NCAA, 802 F. 3d 1049 (9th Cir. 2015), cert. denied, 137 S. Ct. 277 (2016).
 NCAA v. Alston, 594 U.S. ___ (2021).