DOJ Enforcement Update: Higher Education

by McDermott Will & Emery
Contact

McDermott Will & Emery

According to press reports, the Antitrust Division of the US Department of Justice (DOJ) is investigating several issues related to admission of students to institutions of higher learning.

  • In January, reports emerged that DOJ was investigating whether the National Association of College Admission Counseling’s (NACAC’s) ethical guidelines violate the antitrust laws. The DOJ appeared to be concerned about an agreement not to recruit students who have enrolled, registered, declared their intent or submitted deposits to other institutions. This could affect so-called early decision programs, under which students pledge to attend a particular school in return for early consideration of their applications. Although early decision programs have existed for many years, the DOJ could be concerned about schools putting “teeth” into such programs by agreeing with each other not to recruit or accept students who pledge to enroll at other schools.
  • In early April, the Wall Street Journal reported that the DOJ had sent letters to a number of colleges and universities asking that they preserve emails and other messages detailing agreements with other schools regarding their communications with one another about admitted students and how they might use that information. The request suggests that the DOJ could be concerned that schools are unlawfully coordinating with one another regarding admission of students, limiting competition among themselves for the highest-performing students.

The DOJ’s nascent activity follows in the footsteps of other antitrust cases in higher education that have alleged horizontal trade restraints. These cases have involved financial aid, faculty hiring and coordinated application processes. The nub of DOJ’s interest is that the Sherman Act requires higher education institutions to compete for students and faculty in much the same way as ordinary businesses must compete for their customers and workers. Courts have acknowledged that some aspects of higher education differ from ordinary commerce and are subject to less rigorous rules than other types of trade restraints. However, as to the core matters of competing for students and faculty, colleges and universities should strictly avoid agreements that limit rivalry among them.  

The Sherman Act Applies to Institutions of Higher Learning

Section 1 of the Sherman Act forbids agreements in unreasonable restraint of trade. This law covers obvious agreements among commercial competitors such as bid-rigging, price-fixing, and horizontal allocation of territories or markets. Perhaps less obviously, provision of higher learning is a service that the government has treated much as it does other goods and services for antitrust purposes. The Sherman Act has no blanket exemption for restraints of trade by non-profit actors. Nor do state-run universities necessarily benefit from an exemption. The Sherman Act does have a form of judicially-created state action immunity, but its scope is narrow,[i] and it would not likely allow coordination on recruitment of students.

The Sherman Act also covers the activities of associations. Non-profit associations have regularly been subject to antitrust enforcement when their rules seek to restrain competition among their members.[ii]  This includes rules that may be couched as ethical guidelines.[iii]  Associations bring together horizontal market actors who may have a shared interest in limiting competition. Thus, to stay out of DOJ’s crosshairs, institutions should be wary of agreements, understandings or joint guidance as to:

  • Levels of tuition, fees, housing or other costs of attendance
  • The amount or type of financial aid to be offered to students
  • The recruitment of students (g., agreements to limit “poaching” of students, or to limit the discounts and benefits offered to prospective students)
  • The quality of student amenities (g., agreements to limit certain amenities)
  • The hiring, recruitment, and compensation of faculty (g., no-poach agreements)

These types of agreements impair the critical role that the DOJ sees for market competition in serving students. Avoiding such agreements will potentially keep institutions out of hot water with DOJ.

The Per Se Rule and Educational Justifications

The Sherman Act normally treats agreements to restrict price competition or to allocate customers as illegal per se under the Sherman Act, meaning that the courts condemn such agreements without any inquiry into their possible justifications. As to higher education, the Third Circuit muddied the waters a bit in United States v. Brown Univ., allowing some room for schools to justify limited coordination by balancing its harms against the benefits to the educational experience. However, the practical takeaway of Brown remains that it is better to avoid competition-limiting arrangements among schools for the core activities of competition for students and faculty.

The Brown case began when DOJ sued all of the Ivy League schools and MIT for allegedly agreeing to restrict the amount and types of financial aid they would offer to undergraduate students.[iv]  According to DOJ, these agreements were per se illegal because they “had the effect of depriving students receiving financial aid and their families of the benefits of free and open price competition.” The defendant universities other than MIT settled under a consent decree that banned agreements limiting financial aid, among other relief.

MIT initially declined to settle the case, went to trial and lost. On appeal, the Third Circuit reversed and remanded, holding that the trial court should have more fully examined MIT’s pro-consumer justifications for the joint conduct.[v] MIT had claimed, among other things, that the financial aid agreements among schools increased socio-economic diversity at member institutions and that they preserved financial aid resources for the neediest students.[vi] MIT eventually settled the case on terms that allowed it to meet with other schools to discuss common methods to determine need, to exchange financial data through a third party on families to ensure the consistency of the data, and to award financial aid solely on the basis of need.[vii] The settlement barred MIT from discussing individual student awards, prospective tuition or faculty salaries.[viii]

Although the Third Circuit’s Brown opinion gives some solace to institutions in providing room for them to justify collaborations, it ultimately upholds the principle that the Sherman Act does apply in the educational context, and that institutions must use the least restrictive means to advance their stated pro-consumer objectives.[ix]

Antitrust Challenge to The Common Application, Inc.

In a pending private case, an antitrust plaintiff has challenged the activities of The Common Application, Inc., a non-profit association of 700 colleges and universities that operates a single college application platform. The plaintiff, Collegenet, Inc., is a rival application service provider who claims that the Common Application has used tying, bundling, exclusive dealing, and other means to expand its share of the application processing market at Collegenet’s expense. According to the complaint, the Common Application has gone beyond its original mandate of simplifying data collection for students and colleges and caused a loss in net quality of application services, limiting members’ ability to brand and market themselves within their applications. Although the district court initially dismissed the complaint on antitrust standing grounds, the Ninth Circuit reversed and held that plaintiff, Collegenet, properly stated a claim when it alleged that the Common Application “limited college choice, decreased the scope of services and price competition available to student applicants, and foreclosed rivals from entry to the market.” The Common Application has sought certioriari.

The Collegenet decision shows that courts may take a broad view of what constitutes harm to competition when evaluating the legality of collaborations among colleges and universities. If the case survives to trial, the court will likely weigh the harms to competition against any putative benefits of the tying and bundling activities, such as increased ease for students in applying to multiple institutions. The court will also consider whether these benefits could have been achieved through less restrictive means that would have allowed schools to differentiate themselves in the application process.

DOJ and FTC Raise the Heat on “No Poach” Cases

Institutions of higher education have also faced antitrust claims of so-called “no poach” or no-hire agreements with respect to faculty.[x] In Seaman v. Duke Univ., the court certified a class of medical faculty who alleged that Duke and the University of North Carolina had agreed not to hire each other’s personnel. The plaintiffs have settled the case against UNC, but the litigation continues against Duke. The antitrust enforcement agencies have upped the ante still further when it comes to no-poach agreements. In October 2016, the DOJ and the Federal Trade Commission jointly issued their Antitrust Guidance for Human Resource Professionals, which announced that naked horizontal no-hire, no-solicit, or wage-fixing agreements will now be treated as potential criminal violations.[xi] The DOJ had previously filed civil enforcement actions against companies who agreed not to cold-call or hire each other’s employees.[xii] The DOJ’s current leadership has reiterated that it is investigating new cases and will pursue such matters criminally if they persist after the date the HR Guidance was issued. The DOJ also will accept applications under its criminal Leniency Program for violators who are the first to come forward, report illegal agreements, and agree to cooperate against others.

To avoid antitrust problems in today’s climate of aggressive enforcement, law departments at colleges and universities should ensure that anyone with a role in faculty hiring, compensation, and retention is briefed on the need to avoid agreements with rival institutions.[xiii]  Staff should be told to report any solicitation by other institutions to form such agreements. Institutions with questions about the scope of these prohibitions should contact skilled antitrust counsel.

Conclusion

Their public-service mission notwithstanding, the DOJ expects institutions of higher learning to compete freely for students and faculty much as ordinary businesses compete for customers and employees. In today’s high-enforcement environment, college and university counsel should be alert to Sherman Act pitfalls and seek antitrust counsel if close calls arise.


[i]  North Carolina State Bd. Of Dental Examiners v. FTC, 135 S. Ct. 1101 (2015). A state actor’s behavior qualifies for immunity only if: (1) the challenged conduct (i.e., the restraint) is clearly articulated and affirmatively expressed as state policy, and (2) the policy is actively supervised by the state itself.

[ii]  See, e.g., FTC v. Indiana Fed’n of Dentists, 476 U.S. 447 (1986); National Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679 (1978); FTC v. Superior Court Trial Lawyers Assn., 493 U.S. 411 (1990).

[iii] See, e.g., National Soc’y of Prof’l Eng’rs v. United States, 435 U.S. at 696.

[iv]  See Competitive Impact Statement, E.D. Pa. Civ. 91-CV-3274 (May 22, 1991), available at https://www.justice.gov/atr/case-document/file/989886/download

[v]  See United States v. Brown Univ., 5 F.3d 658, 661 (3d Cir. 1993).

[vi] Id. at 674-5.

[vii]  Matthew Brelis, MIT, US Resolve Suit on Aid Data, Boston Globe, Dec. 23, 1993, at 21.

[viii]  Id.

[ix]  United States v. Brown Univ., 5 F.3d at 668.

[x]  See, e.g., Seaman v. Duke Univ., M.D.N.C. No. 1:15-cv-462.

[xi] Department of Justice Antitrust Division and Federal Trade Commission, Antitrust Guidance for Human Resource Professionals, available at https://www.justice.gov/atr/file/903511/download.

[xii]  See, e.g., Complaint, United States v. eBay, Inc., 12-CV-05869-EJD-PSG (N.D. Cal., Nov. 16, 2012), available at https://www.justice.gov/atr/case-document/file/494626/download; Complaint, United States v. Adobe Systems, Inc., et al., 1:10-cv-01629 (D.C. Dist. Sept. 24, 2010), available at https://www.justice.gov/atr/case-document/complaint-0

[xiii] The one exception to this principle is the National Resident Matching Program for medical residencies, which has been exempted from the antitrust laws by statute. See 15 U.S.C. § 37b

Written by:

McDermott Will & Emery
Contact
more
less

McDermott Will & Emery on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.