Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Common Application alleged to restrain trade in undergraduate admissions application processing, (May 12, 2014)

By Linda O’Brien, J.D., LL.M.

Certain member colleges and universities engaged in a conspiracy to restrain trade by limiting the manner in which they compete for student applications through the formation and operation of an online application processing provider organization, according to a complaint filed in the federal district court of Portland (CollegeNET, Inc. v. The Common Application, Inc., May 8, 2014).

CollegeNET offers web-based administrative services, including customized online application forms and processing services to educational institutions in the U.S. The Common Application is an association of over 550 non-profit member colleges and universities that offers a standard college application data service, as well as application forms and processing services used by all of its members.

The complaint states that Common Application was originally formed as a selective membership organization seeking to assist students by simplifying the college admissions process. The organization offered a common student application form that member colleges could use and eliminated the need for student applications to complete basic information required by each college more than once. Common Application has transformed itself into a powerful commercial enterprise that is poised to eliminate competition in the college application processing services market, the complaint charged.

Common Application conditions membership to its organization and access to a pipeline of applicants on the use of its online application forms and processing services to the exclusion of rival providers, according to the complaint. Common Application’s purported promise of simplifying the admission process was alleged to be overstated and misleading. Many colleges are increasingly compelled to join the Common Application because members receive up to 40 percent more applications that they would otherwise receive as well as an increase in their selectivity rankings and application fee revenues.

The complaint alleges that, prior to the implementation of their anticompetitive agreements, colleges and their application service providers, developed branded applications that marketed their unique attributes and distinguished each college from its competitors. The robust competition in application processing inured to the benefit of colleges that were able to seek compatible students, students who were able to maximize their prospects at individual colleges, and application service providers that competed in technical superiority, price, and customer service. By entering into these agreements, Common Application has excluded CollegeNET from the market of providing online college application processing services, thereby having a direct adverse effect on competition. By such practices, Common Application allegedly restrained trade in the relevant markets for those services.

Common Application has abused its market power in the relevant markets and conspired with member colleges to impose restraints on competition, including price restraints, non-compete agreements, product limitations, exclusive dealing arrangements, tying, and a concerted group boycott, according to CollegeNET. These restraints have combined to homogenize the manner in which colleges compete for student applicants, limit competition in undergraduate online application processing services, and exclude rival providers of those services. In a national climate of rising tuition costs and student debt, Common Application’s scheme to eliminate competition between colleges and eliminate third-party servicers from the market is accelerating the cost per student for applying to college and limiting opportunities available to students that would otherwise be available in a free market economy, the complaint alleges.

CollegeNET asserts claims for restraint of trade, refusal to deal/group boycott, exclusive dealing, tying, monopolization, attempted monopolization, conspiracy to monopolize, and violations of Sections 1 and 2 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, disgorgement, and any other just and proper relief.

The case is No. 3:14-cv-00771-KI.

Attorneys: Sarah J. Crooks and Susan E. Foster (Perkins Coie LLP) for CollegeNET, Inc.

Companies: CollegeNET, Inc.; The Common Application, Inc.

News: Antitrust OregonNews