Admissions Confidential: Antitrust Lawsuit Ends in Secret Settlement

After 57 months and dozens of motions, a federal antitrust lawsuit involving two rivals in the admissions industry has ended. The Common Application and CollegeNET on Thursday announced an agreement to resolve a high-profile case that had raised concerns about competition among entities that deliver higher education’s lifeblood: applications from prospective students.

The two parties declined to share with The Chronicle even general terms of the confidential settlement. But according to both sides, the Common Application, though not admitting liability, has agreed to modify one or more practices starting with the 2019-20 application cycle — practices that CollegeNET claimed were anticompetitive and monopolistic. As a result of the settlement, the terms of the Common Application’s membership agreement for participating colleges apparently will soon change, though it’s not yet clear how.

If college admissions is a big-time global business, then application processing is an industry unto itself. As technology has evolved, rival entities have vied to gain, or maintain, a share of the lucrative market. Sometimes, that means going to court.

In May 2014, CollegeNET, a technology company that processes applications for colleges, filed an antitrust suit against the Common Application, a nonprofit organization that runs an online admission form used by more than 800 institutions worldwide. CollegeNET asserted that several of the group’s membership rules and practices amounted to “anticompetitive and exclusionary conduct.”

In its complaint, the company said the Common Application’s member colleges had colluded to limit spending on application-processing services, harming other companies as well as applicants. How? By homogenizing the application process and causing “application churn,” in which students apply to more and more institutions.

CollegeNET also challenged what it called the “nonexclusive penalty.” For many years the Common Application charged lower rates to member colleges that used its application exclusively.

Though that’s no longer true, several other policies that CollegeNET challenged are still in place. The Common Application’s “equal treatment” policy, for instance, requires member colleges to promote all application options equally, charging applicants the same fee for each one. That, CollegeNET argued, unfairly ties a college’s hands.

Twists and Turns

Before the settlement abruptly ended the lawsuit, it had seen several twists and turns. In 2015 a U.S. District Court judge dismissed CollegeNET’s complaint, having found no “sufficient factual allegations of harm.” CollegeNET appealed that ruling, which the U.S. Court of Appeals for the Ninth Circuit later reversed. Then the Common Application filed its own appeal, to the U.S. Supreme Court, which last May declined to hear the case, sending it back to the U.S. District Court, in Portland, Ore.

Late last year Judge Marco A. Hernandez declined a motion to dismiss the lawsuit. He ruled that CollegeNET had shown that the alleged restraints, including the equal-treatment provision, could be anticompetitive.

“Plaintiff alleges that the challenged restraints in the membership agreement amount to a group boycott or refusal to deal in both the admissions and online college-application-processing markets,” Judge Hernandez wrote in his ruling. “In other words, member colleges who would otherwise be competitors and independent decision makers in the marketplace for online application-processing services have, by virtue of their membership, limited their participation in the market.”

Until that point, the Common Application appeared poised to continue pursuing a victory in court — and confident that it would prevail. Yet the judge’s ruling might have prompted the organization to think twice about dragging out the legal battle any further. A spokesman for the Common Application on Thursday declined to discuss the organization’s decision to settle with CollegeNET.

In a legal filing last year, the Common Application’s lawyers argued that if the litigation were to continue, it would saddle member colleges with “substantial discovery burdens.” The lawsuit, they suggested, threatened to “disrupt the college-application process for hundreds of colleges and millions of students.”

Jenny Rickard, the Common Application’s president and chief executive officer, said in a written statement on Thursday that the organization was glad to bring “an appropriate and responsible conclusion to the litigation.” By agreeing to the settlement, she wrote, “we are able to avoid the inconvenience, expense, and burden that would have been borne by all parties, especially colleges and counselors.”

In a written statement, Jim Wolfston, CollegeNET’s founder and chief executive, expressed gratitude for the Common Application’s efforts to resolve the lawsuit: “I appreciate the fact that Common Application officials were thoughtful, open, and willing to work through the practices challenged in the lawsuit.”

All along, the case has been closely watched by admissions officials. One reason: Not long after CollegeNET filed the lawsuit, it signed a contract to build and run a shared online application platform for the Coalition for College, formerly the Coalition for Access, Affordability, and Success, which competes directly with the Common Application. And that has made things awkward for admissions offices that use both applications.

In an email, Richard A. Clark, director of undergraduate admission at the Georgia Institute of Technology, described the end of the lawsuit as a reminder to people who work in education: “We are in the business of educating students and delivering a public good. When educational entities become embroiled in lawsuits such as this, it only detracts from that mission. It has been unfortunate to watch this drag on over the years because you can only imagine the magnitude of resources diverted from innovation and technology that could be leveraged to help students and educational partners.”

Eric Hoover writes about the challenges of getting to, and through, college. Follow him on Twitter @erichoov, or email him, at eric.hoover@chronicle.com.