On March 3, 2020, the American Bar Association (ABA) hosted a Q&A with two members of the Procurement Collusion Strike Force (PCSF)—Mark Grundvig, the Assistant Chief of the DOJ Antitrust Division’s Criminal II section, and Marcus Mills, Special Agent, Major Fraud Investigations Division, USPS Office of Inspector General.
During the course of the Q&A, Mr. Grundvig and Mr. Mills provided their perspective on the goals and progress of the PCSF.
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. (more…)
In a unanimous decision issued on May 24, 2010, the Supreme Court of the United States clarified when participants in a joint venture may face antitrust liability for their joint activities. In American Needle, Inc. v. National Football League, Inc., et al, the Supreme Court ruled that the National Football League (NFL) and its member teams are not immune from the antitrust laws when licensing the teams’ intellectual property rights jointly through a single entity. Instead, the antitrust laws do apply and the teams’/League’s conduct must be analyzed to determine whether it can be an agreement in restraint of trade violating the antitrust laws.
The American Needle decision has broad application to joint ventures and other collaborations involving competitors across all industries. This is because the Supreme Court held that participants to a joint venture are not categorically immune from the antitrust laws even if they form one entity to conduct their joint activities. Rather, the antitrust laws will still apply and courts must apply the “rule of reason,” which requires weighing the pro- and anticompetitive effects of the joint venture’s activities to analyze whether they violate the antitrust laws.
The Supreme Court stated that the test for whether antitrust laws relating to agreements in restraint of trade applies to a joint venture’s conduct focuses on whether the conduct at issue involves separate decision makers whose joint activities would rob the marketplace of “independent centers of decision making” and, thus, actual or potential competition. To make that determination, the Supreme Court stated that courts should focus on “competitive realities” and whether the participants to the joint venture still have separate competing economic interests that are not necessarily aligned. Courts should do this even if participants have formed one entity through which they act and even if participation by competitors in the joint venture is necessary to produce a product or service. The Supreme Court stated the fact that a joint venture that undertakes some conduct for which participation by competitors is required to offer a new product or service enables it to receive rule of reason, rather than per se, analysis, but does not render it immune. The case was remanded for that rule of reason analysis.
The Supreme Court’s decision, the first decision it has granted in favor of a private antitrust plaintiff since the early 1990s, provides a timely opportunity to remind businesses to reexamine their joint ventures and other collaborations involving competitors that may subject them to risk under the antitrust laws. Companies should take a fresh look at their participation in these activities and determine whether certain modifications would reduce their risk of liability under the antitrust laws.