The National Association for College Admission Counseling and its member organizations (“NACAC”) will eliminate and no longer enforce a series of requirements historically limiting the ability of colleges and universities (“colleges”) to compete for the recruitment of first-year and transfer students long included in the NACAC’s Code of Ethics and Professional Practices ( “Ethics Rules”) under a proposed agreement reached with the Justice Department to settle a civil antitrust lawsuit that charged the NACAC and its members with violating the antitrust rules. Along with eliminating barriers that previously limited competition among colleges for new and transfer students, the lawsuit and its settlement provide an important reminder to other associations and their members about the need to ensure contracts, codes of conduct or other policies or practices don’t improperly fix prices or bids, allocate market share or otherwise restrict or prohibit competition among competitors.
The proposed settlement agreement, which will require federal court approval, seeks to resolve a federal civil antitrust lawsuit the Justice Department filed on November 16, 2019, which charged the NACAC and its member organizations with violating Title I of the Sherman Act by illegally conspiring to restrain and restraining competition for the recruitment and retention of college students among its members. The leading trade association for college admissions, the NACAC generally includes two types of members: (1) non-profit colleges and their admissions personnel and (2) high schools and their guidance counselors.
According to the civil antitrust complaint, the Justice Department filed on November 16, 2019, NACAC’s college members compete vigorously for both incoming college students and transfer students in college tuition cost, majors offered, ease and cost of applications, campus amenities, educational quality, institutional reputation, employment prospects post-graduation and other college students. While acknowledging this competition among the academic institutions, the Justice Department charged that mandatory rules included in the NACAC’s Ethics Code illegally prevented or severely limited competition among member colleges by restricting the colleges from (1) directly recruiting transfer students from another college, (2) offering incentives of any kind to college applicants who applied via a process known as Early Decision, and (3) recruiting incoming college freshmen after May 1 (together, “Recruiting Rules”). The complaint charged these Recruiting Rules were horizontal agreements to restrict competition among the schools participating in NACAC that improperly denied American college applicants and potential transfer students access to competitive financial aid packages and benefits and restricted their opportunities to move between colleges. Even though the NCACA members voted to remove the challenged rules from the Ethics Rules in September, 2019, the Justice Department charged the NACAC and its members with illegal restraint of trade in violation of Section 1 of the Sherman Act and asked the court to restrain the NACAC and its members
Under the proposed settlement agreement which will require the approval of the District of Colombia, the NACAC does not admit liability but agrees among other things:
- To abolish, and not to attempt to establish, maintain, or enforce any Early Decision Incentives Rule, Transfer Student Recruiting Rule, or First-Year Undergraduate Recruiting Rule
- Appoint an Antitrust Compliance Officer to oversee and report on compliance to the Justice Department;
- Communicate the rule changes to members and students;
- Maintain compliance with the settlement agreement requirements; and
- Submit to continuing inspection and oversight for compliance.
In addition to the expected benefits that the Justice Department expects college students to realize from the rule change accomplished from the litigation and settlement, the litigation and settlement also provides another reminder to associations and other organizations about the potential perils of seeking to establish, implement or enforce rules or other anticompetitive arrangements among competitors. Trade and other associations and their members, as well as other businesses should take appropriate steps to assess their existing contractual, ethical and other arrangements and agreements to ensure they avoid engaging in similarly risky practices.
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About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications focusing on internal controls and other performance. risk and compliance and operations management.
Scribe for the ABA JCEB Annual Agency Meeting with OCR, Vice Chair of the ABA International Section Life Sciences Committee, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and the ABA RPTE Employee Benefits & Other Compensation Group, Ms. Stamer’s work throughout her 30 plus year career has focused heavily on working with health care, employee benefit, insurance and financial services, professional and trade associations and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.
Author of leading works corporate compliance, governance, internal controls and other concerns, her work includes risk management and compliance counseling and audits, event investigation and redress, representation before regulatory and other bodies; statutory, regulatory and policy advocacy and other assistance to business and government clients. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
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