[Federal Register Volume 85, Number 7 (Friday, January 10, 2020)]
[Notices]
[Pages 1329-1338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00213]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. National Association for College Admission
Counseling; Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v. National Association for College Admission
Counseling, Civil Action No. 1:19-cv-03706. On December 12, 2019, the
United States filed a Complaint alleging that the National Association
for College Admission Counseling (``NACAC'') enacted certain mandatory
rules (collectively referred to as the ``Recruiting Rules'') that
unlawfully limited competition between its members in violation of
Section 1 of the Sherman Act, 15 U.S.C. 1. The proposed Final Judgment,
filed at the same time as the Complaint, prevents NACAC from re-
imposing those or any similar rules. The proposed Final Judgment also
requires NACAC to take specific compliance measures and to cooperate in
any investigation or litigation examining whether or alleging that
NACAC enacted a Recruiting Rule or any similar rule in violation of
Section 1 of the Sherman Act, 15 U.S.C. 1.
Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection on the Antitrust
Division's website at http://www.justice.gov/atr and at the Office of
the Clerk of the United States District Court for the District of
Columbia. Copies of these materials may be obtained from the Antitrust
Division upon request and payment of the copying fee set by Department
of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, including the name of the submitter, and
responses thereto, will be posted on the Antitrust Division's website,
filed with the Court, and, under certain circumstances, published in
the Federal Register. Comments should be directed to Aaron Hoag, Chief,
Technology and Financial Services Section, Antitrust Division,
Department of Justice, 450 Fifth Street NW, Suite 7100, Washington, DC
20530 (telephone: 202-514-4890).
Amy Fitzpatrick,
Counsel to the Senior, Director of Investigations and Litigation.
United States District Court for the District of Columbia
United States of America, Department of Justice, Antitrust
Division, 450 5th Street NW, Suite 7100, Washington, DC 20530,
Plaintiff, v. National Association for College Admission Counseling,
1050 North Highland St., Suite 400, Arlington, VA 22201, Defendant.
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil antitrust
action to obtain equitable relief against Defendant National
Association for College Admission Counseling. The United States alleges
as follows.
I. Introduction
1. This action challenges under Section 1 of the Sherman Act, 15
U.S.C. 1, a number of rules that restrained competition between
colleges and universities (``colleges'') for the recruitment of first-
year and transfer students.
2. Defendant National Association for College Admission Counseling
(``NACAC'') is the leading national trade association for college
admissions. Defendant's members are divided roughly into two groups:
Non-profit colleges and their admissions personnel, and high schools
and their guidance counselors. NACAC's college members compete
vigorously with each other for college students, both incoming freshmen
and transfer students. These colleges compete in a variety of college
services, including tuition cost, majors offered, ease and cost of
application, campus amenities, quality of education, reputation of the
institution, and prospects for employment following graduation.
3. One condition of membership in NACAC is adherence to NACAC's
Code of Ethics and Professional Practices (``CEPP'' or ``Ethics
Rules''), which sets forth mandatory rules for how member organizations
engage in college admissions. These rules are drafted, voted on, and
enforced by NACAC members.
4. As part of its CEPP, NACAC includes certain rules regarding the
recruitment of students by colleges. Prior to September 2019, among
these rules were ones that prevented, or severely limited, 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'').
5. The Recruiting Rules were not reasonably necessary to any
separate, legitimate procompetitive collaboration between NACAC
members. As part of its CEPP, NACAC establishes many rules and
regulations for its members' conduct throughout the college admissions
process, including, among others, when applications may open and close,
the definitions of Early Decision and Early Access, and the use of paid
agents in recruiting students. Many of these rules appear to strengthen
the market for college admissions. The Recruiting Rules, however, were
not reasonably necessary to achieve the otherwise market-enhancing
rules contained in the CEPP, and furthermore had the effect of
unlawfully restraining competition among NACAC's college members,
resulting in harm to college applicants and potential transfer
students.
6. By establishing and enforcing the Recruiting Rules, NACAC
substantially reduced competition among colleges for college applicants
and potential transfer students and deprived these consumers of the
benefits that result from colleges vigorously competing for students.
These Recruiting Rules, which were horizontal agreements among the
schools participating in NACAC, denied American college applicants and
potential transfer students access to competitive financial aid
packages and benefits and restricted their opportunities to move
between colleges.
7. In September 2019, NACAC members voted to remove the Recruiting
Rules from the CEPP. Removal of the Recruiting Rules became effective
as of the time of the vote.
8. NACAC's Recruiting Rules were unlawful restraints of trade that
violated Section 1 of the Sherman Act, 15 U.S.C. 1. The United States
seeks an order prohibiting such agreements and other relief.
II. Jurisdiction and Venue
9. Defendant NACAC is located in, and represents members that do
business in, the United States. The rules at issue affected primarily
the provision of college services in the United States. The colleges
that provide these college services charge significant prices to
students, many of whom legally reside outside the state. The sale of
college services, and the NACAC rules that affect the sale, are
therefore in the flow
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of and substantially affect interstate commerce. The Court has subject
matter jurisdiction under Section 4 of the Sherman Act, 15 U.S.C. 4,
and under 28 U.S.C. 1331 and 1337, to prevent and restrain Defendant
and its members from violating Section 1 of the Sherman Act, 15 U.S.C.
1.
10. Defendants have consented to venue and personal jurisdiction in
this district. Venue is proper in this district under Section 12 of the
Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391.
III. Defendant
11. Defendant NACAC is a trade association comprised of college
admissions personnel and high school guidance counselors and their
respective institutions. Although NACAC does have members around the
world, its principal focus is on college admissions in the United
States. NACAC currently has in excess of 15,000 members, representing
several thousand colleges and high schools. In addition to maintaining
and enforcing the CEPP, NACAC provides educational training to members,
engages in lobbying and other public outreach, and holds dozens of
popular college fairs that allow colleges to meet and recruit
prospective students.
IV. Trade and Commerce
12. NACAC is the largest trade association focused on college
admissions in the United States.
13. There is significant competition among colleges for college
students, especially incoming freshmen. Colleges compete on a number of
different dimensions of college services, including tuition cost,
majors offered, ease and cost of application, campus amenities, quality
of education, reputation of the institution, and prospects for
employment following graduation. The focal point for that competition
is the college admissions process.
14. Colleges employ a number of competitive tactics to encourage
students to apply for admission to, and ultimately attend, their
institutions. Colleges typically heavily advertise to prospective
applicants, including by sending physical and electronic mailings, by
participating in college fairs, and by direct solicitation on high
school campuses. Competition, however, does not end there. If a
prospective student is accepted by more than one college, there is
typically a competitive negotiation between the student and each
college over the financial aid package offered to the student.
Additionally, if a college has not met its enrollment goals by the
summer before school begins, it often will reach back out to
prospective students to make a competitive pitch to entice the student
to commit to enrolling at the college in the fall. Finally, even after
classes begin, many colleges advertise college transfer programs that
allow students to move from one college to another between semesters.
15. In competitive circumstances, colleges would compete vigorously
for students to purchase their college services. This competition
benefits students because it lowers the cost of attendance and
increases the incentive that the colleges have to provide high quality
or innovative services. Competition also improves an applicant's
ability to negotiate for a better financial aid package with the
college. Defendant's Recruiting Rules, however, blunted several avenues
of competition for students and disrupted the normal competitive
mechanisms that would otherwise apply.
V. The Unlawful Rules
16. For decades, NACAC has had a set of rules governing the college
admissions process for its members. Historically, some of the rules
were mandatory for all members, and others were voluntary ``best
practices.'' In 2017, NACAC members voted to reformulate the mandatory
rules into the 2017 CEPP. The CEPP rules are mandatory for all NACAC
members, which includes most non-profit colleges and universities in
the United States, and also for any non-member institutions that
participate in NACAC's college fairs. Accordingly, agreeing to NACAC
membership, or agreeing to participate in a NACAC college fair, is
equivalent to agreeing with other members or college fair participants
to execute on the restrictions in the CEPP. The 2017 CEPP governs many
aspects of the college admissions process for its members, including,
most relevant to this action, the recruitment of students.
17. The 2017 CEPP included several rules that unreasonably
restricted some of the ways in which colleges recruited incoming
freshmen and transfer students. The three Recruiting Rules at issue in
this case are (1) the Transfer Student Recruiting Rule, (2) the Early
Decision Incentives Rule, and (3) the First-Year Undergraduate
Recruiting Rule. While the CEPP certainly included rules and
regulations that were aimed at, and actually do, increase
competitiveness between schools and ease the burden of students
applying to college, these Recruiting Rules were not reasonably
necessary to those procompetitive rules or any other separate,
legitimate business transaction or collaboration between NACAC's
members. Prior to the 2017 CEPP, virtually identical rules were voted
on and included in earlier NACAC rules and have been in place for
years.
A. Transfer Student Recruiting Rule
18. The Transfer Student Recruiting Rule was codified at paragraph
II.D.5 of the 2017 CEPP and instructed that, ``[c]olleges must not
solicit transfer applications from a previous year's applicant or
prospect pool unless the students have themselves initiated a transfer
inquiry or the college has verified prior to contacting the students
that they are either enrolled at a college that allows transfer
recruitment from other colleges or are not currently enrolled in a
college.''
19. The Transfer Student Recruiting Rule acted as a ban on
affirmatively recruiting transfer students, unduly restraining
competition for transfer students amongst colleges.
20. Without this opportunity for colleges to compete, potential
transfer students may be unaware of transfer opportunities that may
provide them lower priced or higher quality college services.
21. Absent the Transfer Student Recruiting Rule, colleges can
engage in significantly more recruitment of transfer students through
direct solicitation or otherwise. Furthermore, colleges will likely
seek to provide better experiences to their existing student base in
order to retain them in the face of increased competition for
transfers.
B. Early Decision Incentives Rule
22. The Early Decision Incentives Rule was codified at paragraph
II.A.3.a.vi of the 2017 CEPP and provided that ``[c]olleges must not
offer incentives exclusive to students applying or admitted under an
Early Decision application plan. Examples of incentives include the
promise of special housing, enhanced financial aid packages, and
special scholarships for Early Decision admits.''
23. NACAC defined Early Decision in the 2017 CEPP as an application
plan where ``[s]tudents commit to a first-choice college and, if
admitted, agree to enroll and withdraw their other college
applications.'' The Early Decision application plan is akin to an
exclusive contract in any other industry. In this case, the student
foregoes the opportunity to consider the competitive offers of other
institutions in exchange for an early decision on acceptance. Colleges
thus stand as direct competitors for Early Decision
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applicants, because those applicants are far more likely, if accepted,
to attend the college. This results in an increased yield, which is the
percentage of accepted applicants that choose to attend the college.
Yield is critically important to colleges--overestimating expected
yield can lead to less students attending than anticipated (thus
lowering total tuition received), which could force the college to cut
classes or layoff staff. The increased yield from Early Decision
applicants is financially significant to colleges.
24. The Early Decision Incentives Rule explicitly limited the scope
of competition for Early Decision students by removing the ability of
colleges to incent students financially or otherwise. At base, the only
form of payment an institution may provide in exchange for the
exclusive contract with an applicant is the early decision itself. The
rule prohibited all other forms of competition specifically targeted at
particular Early Decision applicants.
25. Absent the Early Decision Incentives Rule, colleges are free to
use any number of competitive levers to more aggressively recruit
students. Some institutions may prefer to offer only the early
decision, while others might compete more aggressively, such as by
offering scholarships, preferential housing, or early course
registration for those admitted under Early Decision.
C. First-Year Undergraduate Recruiting Rule
26. The First-Year Undergraduate Recruiting Rule was codified at
paragraph II.B.5 of the 2017 CEPP and required that, among other
things, ``[c]olleges will not knowingly recruit or offer enrollment
incentives to students who are already enrolled, registered, have
declared their intent, or submitted contractual deposits to other
institutions.'' Furthermore, while the rule allowed colleges to
``contact students who have neither deposited nor withdrawn their
applications to let them know that they have not received a response
from them,'' it also commanded that schools could ``neither offer nor
imply additional financial aid or other incentives'' were available
unless the student had ``affirmed that they [had] not deposited
elsewhere and [were] still interested in discussing fall enrollment.''
27. The First-Year Undergraduate Recruiting Rule imposed
significant restraints on a college's ability to recruit students. The
rule created an arbitrary deadline of May 1 for all colleges to cease
improving their recruitment offers to students, even though many
students do not decide on a college until well after May 1 and many
colleges therefore can reallocate resources to make better offers after
May 1. Furthermore, the rule imposed significant hurdles before a
college could improve its offer to a prospective student, requiring
that the student first affirm both that they ``[had] not deposited
elsewhere'' and were ``still interested in discussing fall
enrollment.'' By directly limiting the ability of colleges to improve
their offers to students, the First-Year Undergraduate Recruiting Rule
operated as a significant restraint on competition.
28. The arbitrariness of the May 1 deadline was fully highlighted
by the recognized exception to the rule ``when students are admitted
from a wait list.'' Section II.C of the CEPP regulates institutions'
use of wait lists and explicitly authorizes schools to accept students
off of a wait list as late as August 1, even when those students have
already committed to attend another school. NACAC thus allows for
vigorous competition over a student already committed to another school
when a change in circumstances frees up a spot for a student on the
wait list. The change in circumstances that free up additional
resources to make a better offer is not conceptually distinct, but the
rules explicitly allowed the former and prohibited the latter,
restricting an opportunity for students to benefit from the sorting
process.
29. Absent the First-Year Undergraduate Recruiting Rule,
institutions are free to continue to improve their offers to students
after May 1, to the benefit of those students. If students have made up
their minds about their school of choice, or are otherwise insensitive
to the change in circumstances, they can simply reject any further
offers received from other schools. For students who may change their
minds due to a more beneficial offer, continued recruitment can only
work to their benefit.
VI. Violation Alleged
30. Defendant's college members are direct competitors in college
services and compete vigorously for students. Defendant coordinated and
enforced an anticompetitive agreement that restrained colleges from
improving their offers or otherwise competing vigorously to be selected
by students in the college admissions process.
31. Defendant's Recruiting Rules eliminated significant forms of
competition to attract students. These rules, which were horizontal
agreements between NACAC's college members, denied college applicants
and potential transfer students access to potentially better financial
aid packages and benefits and restricted their opportunities to move
between colleges that offered superior services.
32. Accordingly, Defendant's Recruiting Rules constituted
unreasonable restraints of trade in violation of Section 1 of the
Sherman Act, 15 U.S.C. 1.
VII. Request for Relief
33. The United States requests that this Court:
(a) Adjudge and decree that Defendant's Recruiting Rules are
unreasonable restraints of trade and interstate commerce in violation
of Section 1 of the Sherman Act;
(b) enjoin and restrain Defendant from enforcing or adhering to any
Recruiting Rules that unreasonably restrict competition for students;
(c) permanently enjoin and restrain Defendant from establishing
similar rules in the future, except as prescribed by the Court;
(d) award the United States such other relief as the Court may deem
just and proper to redress and prevent recurrence of the alleged
violations and to dissipate the anticompetitive effects of the illegal
agreements entered into by Defendant; and
(e) award the United States the costs of this action.
Dated: December 12, 2019.
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA
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Makan Delrahim,
Assistant Attorney General for Antitrust.
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Aaron D. Hoag,
Chief, Technology and Financial Services Section.
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Bernard A. Nigro, Jr. (D.C. Bar #412357),
Principal Deputy Assistant Attorney General.
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Danielle Hauck,
Adam Severt,
Assistant Chiefs, Technology and Financial Services Section.
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Kathleen O'Neill,
Senior Director of Investigations and Litigation.
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Ryan S. Struve (D.C. Bar #495406),
Travis Chapman,
Aaron Comenetz (D.C. Bar #479572),
Erin Craig,
Adrienne Hahn,
Trial Attorneys.
United States Department of Justice, Antitrust Division, Technology
and Financial Services Section, 450 Fifth Street NW, Suite 7100,
Washington, DC 20530, Telephone: (202) 514-4890, Email:
[email protected].
[[Page 1332]]
United States District Court for the District of Columbia
United States of America, Plaintiff, v.
National Association for College Admission Counseling,
Defendant.
[Proposed] Final Judgment
Whereas, Plaintiff, United States of America, filed its Complaint
on [DATE], alleging that Defendant National Association for College
Admission Counseling violated Section 1 of the Sherman Act, 15 U.S.C.
Sec. 1, the United States and the Defendant, by its attorneys, have
consented to the entry of this Final Judgment without trial or
adjudication of any issue of fact or law;
And whereas, this Final Judgment does not constitute any evidence
against or admission by any party regarding any issue of fact or law;
And whereas, the Defendant agrees to be bound by the provisions of
this Final Judgment pending its approval by this Court;
And whereas, the Defendant agrees to undertake certain actions and
refrain from certain conduct for the purpose of remedying the
anticompetitive effects alleged in the Complaint;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ordered, adjudged, and decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter and each of the
parties to this action. The Complaint states a claim upon which relief
may be granted against the Defendant under Section 1 of the Sherman
Act, as amended, 15 U.S.C. 1.
II. Definitions
As used in this Final Judgment:
A. ``NACAC'' and ``Defendant'' mean the National Association for
College Admission Counseling, a non-profit trade association with its
headquarters in Arlington, Virginia, its successors and assigns, and
its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures, and their directors, officers, managers, agents, and
employees.
B. ``Agreement'' means any agreement, understanding, pact,
contract, or arrangement, formal or informal, oral or written, between
two or more persons.
C. ``Early Decision'' means the college application plan as defined
and used by the Ethics Rules.
D. ``Early Decision Incentives Rule'' means any Rule or Agreement,
or part of a Rule or Agreement, including, but not limited to, Section
II.A.3.a.vi of the Ethics Rules, that restrains any person from
offering incentives to students applying under an Early Decision
application plan that are not available to students applying under a
different application plan.
E. ``First-Year Undergraduate Recruiting Rule'' means any Rule or
Agreement, or part of a Rule or Agreement, including, but not limited
to, Section II.B.5 of the Ethics Rules, that restrains any college or
university from recruiting or offering enrollment incentives to first-
year college applicants on the basis that (a) a particular date has
passed; (b) the applicants have either declined admission or not
affirmatively indicated that they are still interested in attending
that institution; or (c) the applicants have already enrolled in,
registered at, declared their intent to enroll in or register at, or
submitted contractual deposits to other institutions.
F. ``Transfer Student Recruiting Rule'' means any Rule or
Agreement, or part of a Rule or Agreement, including, but not limited
to, Section II.D.5 of the Ethics Rules, that restrains any person from
recruiting or offering enrollment incentives to transfer students.
G. ``Ethics Rules'' means NACAC's Code of Ethics and Professional
Practices.
H. ``Rule'' means an enforceable regulation governing particular
conduct or activities.
I. ``Person'' means any natural person, college or university,
corporation, company, partnership, joint venture, firm, association,
proprietorship, agency, board, authority, commission, office, or other
business or legal entity, whether private or governmental.
J. ``Management'' means all officers, directors, committee chairs,
and board members of NACAC, or any other person with management or
supervisory responsibilities for NACAC's operations.
III. Applicability
This Final Judgment applies to NACAC, and to all other persons in
active concert or participation with NACAC who receive actual notice of
this Final Judgment by personal service or otherwise.
IV. Prohibited Conduct
Defendant shall not establish, attempt to establish, maintain, or
enforce any Early Decision Incentives Rule, Transfer Student Recruiting
Rule, or First-Year Undergraduate Recruiting Rule. To the extent such
prohibited rules currently exist in the Ethics Rules, Defendant must
promptly abolish them.
V. Conduct Not Prohibited
Nothing in Section IV shall prohibit Defendant from maintaining or
enforcing any current provisions in the Ethics Rules other than those
specifically enumerated in Paragraphs II.D, E, and F.
VI. Required Conduct
A. Within ten (10) days of entry of this Final Judgment, Defendant
shall appoint an Antitrust Compliance Officer and identify to United
States the Antitrust Compliance Officer's name, business address, and
telephone number. Within forty-give (45) days of a vacancy in the
Defendant's Antitrust Compliance Officer position, the Defendant shall
appoint a replacement, and shall identify to the United States the
replacement Antitrust Compliance Officer's name, business address,
telephone number, and email address. The Defendant's initial or
replacement appointment of an Antitrust Compliance Officer is subject
to the approval of the United States in its sole discretion.
B. The Antitrust Compliance Officer shall:
1. Within sixty (60) days of entry of the Final Judgment, furnish
to all of the Defendant's Management a copy of this Final Judgment, the
Competitive Impact Statement, and a cover letter in a form attached as
Exhibit 1;
2. within sixty (60) days of entry of the Final Judgment, in a
manner to be devised by Defendant and approved by the United States,
provide the Defendant's Management and employees reasonable notice of
the meaning and requirements of this Final Judgment;
3. annually brief the Defendant's Management on the meaning and
requirements of this Final Judgment and the antitrust laws;
4. brief any person who succeeds a person in any position
identified in Paragraph II(J), within sixty (60) days of such
succession;
5. obtain from each member of Management, within sixty (60) days of
that person's receipt of the Final Judgment, a certification that he or
she (i) has read and, to the best of his or her ability, understands
and agrees to abide by the terms of this Final Judgment; (ii) is not
aware of any violation of the Final Judgment that has not been reported
to the Defendant; and (iii) understands that any person's failure to
comply with this Final Judgment may result in an enforcement action for
civil or criminal contempt of court against the Defendant and/or any
person who violates this Final Judgment;
6. maintain a record of certifications received pursuant to this
Section; and
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7. annually communicate to the Defendant's Management and employees
that they may disclose to the Antitrust Compliance Officer, without
reprisal, information concerning any potential violation of this Final
Judgment or the antitrust laws.
C. Within sixty (60) days of entry of the Final Judgment, Defendant
shall furnish notice of this action to its members through (1) direct
communication, in a form approved by the United States prior to
communication and containing the text of Exhibit 2 and (2) the creation
of website pages linked to the Defendant website, to be posted for no
less than one (1) year after the date of entry of the Final Judgment,
containing the text of Exhibit 2 and links to the Final Judgment,
Competitive Impact Statement, and Complaint on the Antitrust Division's
website.
D. Defendant shall:
1. Upon Management's or the Antitrust Compliance Officer's learning
of any violation or potential violation of any of the terms and
conditions contained in this Final Judgment, promptly take appropriate
action to investigate, and in the event of a violation, terminate or
modify the activity so as to comply with this Final Judgment and
maintain all documents related to any violation or potential violation
of this Final Judgment;
2. within sixty (60) days of Management's or the Antitrust
Compliance Officer's learning of any violation or potential violation
of any of the terms and conditions contained in this Final Judgment,
file with the United States a statement describing any violation or
potential violation, which shall include a description of any
communications constituting the violation or potential violation,
including the date and place of the communication, the persons
involved, and the subject matter of the communication, and steps taken
to remedy any violation; and
3. have its CEO or CFO, and its General Counsel, certify in writing
to the United States annually on the anniversary date of the entry of
this Final Judgment that the Defendant has complied with the provisions
of this Final Judgment.
VII. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time authorized representatives of the United States,
including agents retained by the United States, shall, upon the written
request of an authorized representative of the Assistant Attorney
General in charge of the Antitrust Division, and on reasonable notice
to Defendant be permitted:
1. Access during Defendant's office hours to inspect and copy, or
at the option of the United States, to require Defendant to provide
electronic or hard copies of, all books, ledgers, accounts, records,
data, and documents in the possession, custody, or control of NACAC,
relating to any matters contained in this Final Judgment; and
2. to interview, either informally or on the record, Defendant's
Management, officers, employees, or agents, who may have their
individual counsel present, regarding such matters. The interviews
shall be subject to the reasonable convenience of the interviewee and
without restraint or interference by Defendant.
B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
Defendant shall submit written reports or responses to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this Section VII shall be divulged by the United States to any person
other than an authorized representative of the executive branch of the
United States, except in the course of legal proceedings to which the
United States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Final Judgment, or for law
enforcement purposes, or as otherwise required by law.
D. If at the time information or documents are furnished by
Defendant to the United States, Defendant represents and identifies in
writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(1)(G) of the
Federal Rules of Civil Procedure, and Defendant marks each pertinent
page of such material, ``Subject to claim of protection under Rule
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United
States shall give Defendant ten (10) calendar days' notice prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding).
VIII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
IX. Enforcement of Final Judgment
A. The United States retains and reserves all rights to enforce the
provisions of this Final Judgment, including the right to seek an order
of contempt from the Court. Defendant agrees that in any civil contempt
action, any motion to show cause, or any similar action brought by the
United States regarding an alleged violation of this Final Judgment,
the United States may establish a violation of the Final Judgment and
the appropriateness of any remedy therefor by a preponderance of the
evidence, and Defendant waives any argument that a different standard
of proof should apply.
B. This Final Judgment should be interpreted to give full effect to
the procompetitive purposes of the antitrust laws and to restore all
competition the United States alleged was harmed by the challenged
conduct. Defendant agrees that it may be held in contempt of, and that
the Court may enforce, any provision of this Final Judgment that, as
interpreted by the Court in light of these procompetitive principles
and applying ordinary tools of interpretation, is stated specifically
and in reasonable detail, whether or not it is clear and unambiguous on
its face. In any such interpretation, the terms of this Final Judgment
should not be construed against either party as the drafter.
C. In any enforcement proceeding in which the Court finds that
Defendant has violated this Final Judgment, the United States may apply
to the Court for a one-time extension of this Final Judgment, together
with other relief as may be appropriate. In connection with any
successful effort by the United States to enforce this Final Judgment
against Defendant, whether litigated or resolved before litigation,
Defendant agrees to reimburse the United States for the fees and
expenses of its attorneys, as well as any other costs, including
experts' fees, incurred in connection with that enforcement effort,
including in the investigation of the potential violation.
D. For a period of four (4) years following the expiration of the
Final Judgment, if the United States has evidence that Defendant
violated this Final Judgment before it expired, the United States may
file an action against Defendant in this Court requesting that the
Court order (1) Defendant to comply with the terms of this Final
Judgment for an additional term of at least four
[[Page 1334]]
years following the filing of the enforcement action under this
Section, (2) any appropriate contempt remedies, (3) any additional
relief needed to ensure the Defendant complies with the terms of the
Final Judgment, and (4) fees or expenses as called for in Paragraph
IX(C).
X. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire seven (7) years from the date of its entry, except that after
five (5) years from the date of its entry, this Final Judgment may be
terminated upon notice by the United States to the Court and Defendant
that the continuation of the Final Judgment no longer is necessary or
in the public interest.
XI. Notice
For purposes of this Final Judgment, any notice or other
communication required to be provided to the United States shall be
sent to the person at the address set forth below (or such other
addresses as the United States may specify in writing to Defendant):
Chief, Technology and Financial Services Section, U.S. Department of
Justice, Antitrust Division, 450 Fifth Street NW, Suite 7100,
Washington, DC 20530.
XII. Public Interest Determination
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16, including making copies available to the
public of this Final Judgment, the Competitive Impact Statement, and
any comments thereon and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this Final Judgment is in the public interest.
Date:------------------------------------------------------------------
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16
-----------------------------------------------------------------------
United States District Judge
Exhibit 1
[Company Letterhead]
[Name and Address of Antitrust Compliance Officer]
Re: Early Decision Incentives Rule, Transfer Student Recruiting Rule,
or First-Year Undergraduate Recruiting Rule
Dear [XX]:
I am providing you this notice regarding a judgment recently
entered by a federal judge in Washington, DC affecting rulemaking
practices. The judgment applies to our association and all of its
employees, including you, so it is important that you understand the
obligations it imposes on us. [CEO Name] has asked me to let each of
you know that [s/he] expects you to take these obligations seriously
and abide by them.
The judgment prohibits us from establishing rules that restrict the
ability of colleges to recruit early decision applicants, incoming
freshmen, and transfer students. There are limited exceptions to this
restriction. You must consult me before determining whether a
particular recruiting rule is subject to an exception under the
judgment.
A copy of the court order is attached. Please read it carefully and
familiarize yourself with its terms. The judgment, rather than the
above description, is controlling. If you have any questions about the
judgment or how it affects your activities, please contact me as soon
as possible.
Thank you for your cooperation.
Sincerely,
[Defendant's Antitrust Compliance Officer]
Exhibit 2
Please take notice that National Association for College Admission
Counseling (``NACAC'') has entered into a settlement with the United
States Department of Justice relating to its rulemaking practices.
On December 12th, 2019, the United States filed a federal civil
antitrust Complaint alleging that NACAC established rules that
restricted its members' ability to recruit college applicants and
transfer students in violation of Section 1 of the Sherman Act, 15
U.S.C. 1. At the same time, the United States filed a proposed
settlement that prohibits NACAC from entering into, maintaining, or
enforcing such rules.
As part of its settlement with the United States, NACAC confirmed
that it has withdrawn any offending rule already in place.
The Final Judgment, which was recently entered by a federal
district court, is effective for seven years. Copies of the Complaint,
Final Judgment, and Competitive Impact Statement are available at:
[Link to Complaint]
[Link to Final Judgment]
[Link to Competitive Impact Statement]
United States District Court for the District of Columbia
United States of America, Plaintiff, v. National Association for
College Admission Counseling, Defendant.
Competitive Impact Statement
Plaintiff United States of America (``United States''), pursuant to
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact
Statement relating to the proposed Final Judgment submitted for entry
in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
On December 12, 2019, the United States filed a civil antitrust
Complaint alleging that Defendant National Association for College
Admission Counseling (``NACAC'') enacted certain mandatory rules
(collectively referred to as the ``Recruiting Rules'') that unlawfully
limited competition between its members in violation of Section 1 of
the Sherman Act, 15 U.S.C. Sec. 1.
NACAC members include colleges and their admissions personnel and
high schools and their guidance counselors. NACAC's college members
compete with each other for college students, both college applicants
and potential transfer students. Colleges compete on a number of
different dimensions, including tuition cost, majors offered, ease and
cost of application, campus amenities, quality of education, reputation
of the institution, and prospects for employment following graduation.
The Complaint, however, alleges that NACAC, through its rulemaking
authority, established three mandatory rules that limited the manner in
which its college members could compete for college applicants and
potential transfer students.
The first rule, the Transfer Student Recruiting Rule, expressly
prevented colleges from affirmatively recruiting potential transfer
students from other schools. The second rule, the Early Decision
Incentives Rule, forbade colleges from offering incentives, financial
or otherwise, to Early Decision applicants. The third rule, the First-
Year Undergraduate Recruiting Rule, limited the ability of colleges to
recruit incoming first-year students after May 1. These three rules--
collectively ``the Recruiting Rules''--were not reasonably necessary to
any separate, legitimate business transaction or collaboration among
NACAC and its members. According to the Complaint, the Defendant's
Recruiting Rules unlawfully restricted competition between NACAC's
members and were unreasonable restraints of trade that violated Section
1 of the Sherman Act, 15 U.S.C. Sec. 1.
[[Page 1335]]
At the same time the Complaint was filed, the United States filed a
Stipulation and Order and proposed Final Judgment, which would remedy
the violation by enjoining the Defendant from enacting, maintaining, or
enforcing the Recruiting Rules, subject to limited exceptions.
NACAC members voted in September of 2019 to repeal the Recruiting
Rules, effective as of that time, and the Final Judgment seeks to
prevent NACAC from re-imposing those or any similar rules. The proposed
Final Judgment also requires NACAC to take specific compliance measures
and to cooperate in any investigation or litigation examining whether
or alleging that NACAC enacted a Recruiting Rule or any similar rule in
violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1.
The United States and NACAC have stipulated that the proposed Final
Judgment may be entered after compliance with the APPA. Entry of the
proposed Final Judgment would terminate this action, except that the
Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of the Events Giving Rise to the Alleged Violation
A. The Defendant
NACAC is a nonstock corporation organized in the State of Delaware
and headquartered in Arlington, Virginia. Beyond establishing ethics
rules that govern its members, NACAC holds dozens of college fairs that
allow prospective students to interact with a number of regional and
national colleges.
B. Defendant-Established Anticompetitive Recruiting Rules
The Complaint alleges that NACAC, through the version of its Code
of Ethics and Professional Practices (``CEPP'' or ``Ethics Rules'')
that was effective during and prior to 2018, established three rules
that unreasonably restrained competition between its member colleges
for college applicants and potential transfer students. These rules,
described in more detail below, were voted on by NACAC's members and
were mandatory not only for NACAC's members but also for any non-
members that participated in NACAC's college fairs. Failure to abide by
the rules embodied in the CEPP could have resulted in disciplinary
actions by NACAC, including but not limited to exclusion from its
college fairs or expulsion from NACAC.
1. Transfer Student Recruiting Rule
The first rule at issue is the Transfer Student Recruiting Rule,
originally embodied at Section II.D.5 of the CEPP. That rule provided
that:
Colleges must not solicit transfer applications from a previous
year's applicant or prospect pool unless the students have
themselves initiated a transfer inquiry or the college has verified
prior to contacting the students that they are either enrolled at a
college that allows transfer recruitment from other colleges or are
not currently enrolled in a college.
As described in the Complaint, this rule acted as a substantial
impediment to competition between colleges for potential transfer
students, and provided only limited exceptions that allowed for
transfer recruitment. Absent this restriction, colleges will be free to
recruit potential transfer students more aggressively, which will lead
to colleges to making more attractive offers, like lower tuition costs
or higher quality admissions packages.
2. Early Decision Incentives Rule
The second rule at issue is the Early Decision Incentives Rule,
which was at Section II.A.3.a.vi of the CEPP. This rule stated that:
Colleges must not offer incentives exclusive to students
applying or admitted under an Early Decision application plan.
Examples of incentives include the promise of special housing,
enhanced financial aid packages, and special scholarships for Early
Decision admits. Colleges may, however, disclose how admission rates
for Early Decision differ from those for other admission plans.
This rule, as alleged in the Complaint, unreasonably limited the
competition for Early Decision applicants. In the current admissions
ecosystem, some colleges allow students to apply via Early Decision,
which provides students with an accelerated decision on admission to
that school but also requires from the student a binding commitment to
attend if admitted. The Early Decision Incentives Rule forbade colleges
from offering incentives (beyond the accelerated decision) to those
students. This was an unreasonable restraint on competition. Absent
this restriction, colleges will be free to offer a set of incentives
for Early Decision applicants that best serves the college and its
applicant base, including special scholarships, preferred housing, or
other discounts on tuition. Over time, this will lead to more
aggressive recruitment of students through more attractive offers of
admission.
3. First-Year Undergraduate Recruiting Rule
The final rule at issue is the First-Year Undergraduate Recruiting
Rule, which was at Section II.B.5 of the CEPP. This rule required that:
Colleges will not knowingly recruit or offer enrollment
incentives to students who are already enrolled, registered, have
declared their intent, or submitted contractual deposits to other
institutions. May 1 is the point at which commitments to enroll
become final, and colleges must respect that. The recognized
exceptions are when students are admitted from a wait list, students
initiate inquiries themselves, or cooperation is sought by
institutions that provide transfer programs. These statements
capture the spirit and intent of this requirement:
a. Whether before or after May 1, colleges may at any time
respond to a student- initiated request to reconsider an offer or
reinstate an application.
b. Once students have declined an offer of admission, colleges
may no longer offer them incentives to change or revisit their
college decision. Before May 1, however, colleges may ask whether
candidates would like a review of their financial aid package or
other incentives before their admission is canceled, so long as the
question is asked at the time that the admitted students first
notify them of their intent to cancel their admission.
c. After May 1, colleges may contact students who have neither
deposited nor withdrawn their applications to let them know that
they have not received a response from them. Colleges may neither
offer nor imply additional financial aid or other incentives unless
students have affirmed that they have not deposited elsewhere and
are still interested in discussing fall enrollment.
This rule imposed several limits on the ability of colleges to
recruit incoming first-year students. First, it prevented colleges from
recruiting students who the colleges knew had declared their intent,
through making a deposit or otherwise, to attend another institution.
Second, it prevented colleges from offering incentives to students who
had declined an offer of admission (with the limited exception set
forth in II.B.5.b. of the CEPP). Third, it limited the ability of
colleges, after May 1, to recruit students who had neither made a
deposit nor withdrawn their application.
The First-Year Undergraduate Recruiting Rule imposed significant
restrictions on competition between colleges for first-year students.
It limited the ability of colleges to continue to compete for students
who had declined an offer of admission and significantly restricted the
ability of colleges to compete for students after May 1. Absent these
restrictions, colleges will be free to offer more aggressive financial
aid packages or other inducements to students to entice them to enroll.
Due to
[[Page 1336]]
this enhanced competition, students will receive more attractive offers
of admission.
C. NACAC's Recruiting Rules Were Unlawful Agreements Under Section 1 of
the Sherman Act
Horizontal restraints that are not reasonably necessary to any
separate, legitimate business transaction or collaboration are unlawful
under Section 1 of the Sherman Act. Section 1 outlaws any ``contract,
combination . . . , or conspiracy, in restraint of trade or commerce.''
15 U.S.C. 1. Courts have long interpreted this language to prohibit
only ``unreasonable'' restraints of trade. Bus. Elecs. Corp. v. Sharp
Elecs. Corp., 485 U.S. 717, 723 (1988). Courts have consistently found
that trade association rules are no different than horizontal
agreements entered into between the association's members. For example,
in National Society of Professional Engineers v. United States, 435
U.S. 679 (1978), the Supreme Court upheld a challenge to a trade
association's ban on competitive bidding as a horizontal agreement
between its members. Other Supreme Court precedent is consistent with
this outcome.\1\ Additionally, when a trade association works to
enforce a stated policy, it faces ``more rigorous antitrust scrutiny.''
Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 501 n.6
(1988) (citing Radiant Burners, Inc. v. Peoples Gas Light & Coke Co.,
364 U.S. 656 (1961); Fashion Originators' Guild of America, Inc. v.
FTC, 312 U.S. 457 (1941)).
---------------------------------------------------------------------------
\1\ See, generally, Fed. Trade Comm'n v. Indiana Fed'n of
Dentists, 476 U.S. 447 (1986); California Dental Ass'n v. Fed. Trade
Comm'n, 526 U.S. 756 (1999).
---------------------------------------------------------------------------
The United States has historically challenged the actions of trade
associations or other membership organizations where they advance
unreasonable restraints among their memberships. In addition to the
Professional Engineers case cited above, on June 27, 1995, the United
States challenged several accreditation practices of the American Bar
Association as violative of Section 1.\2\ The United States has also
challenged association rules in the chiropractic,\3\ nursing,\4\ and
realty \5\ industries, among others.
---------------------------------------------------------------------------
\2\ Complaint, United States v. American Bar Association, No.
95-cv-1211 (D.D.C. June 27, 1995).
\3\ Complaint, United States v. Oklahoma State Chiropractic
Independent Physicians Association, No 13-CV-21-TCK-TLW (N.D. Okla.
January 10, 2013).
\4\ Complaint, United States v. Arizona Hospital and Healthcare
Association, No. CV07-1030-PHX (D.Ariz. May 22, 2007).
\5\ Complaint, United States v. National Association of
Realtors, No. 05C-5140 (N.D. Ill. Sept. 8, 2005).
---------------------------------------------------------------------------
As described in the Complaint, NACAC's Recruiting Rules were
horizontal agreements restricting competition between colleges for
college applicants and potential transfer students. The Recruiting
Rules suppressed and eliminated competition to the detriment of college
applicants and potential transfer students by restraining the ability
of NACAC's college members to recruit them. They were not reasonably
necessary to achieve the otherwise market-enhancing rules contained in
the CEPP. Accordingly, they were unlawful agreements under Section 1 of
the Sherman Act.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment sets forth (1) conduct in which the
Defendant may not engage; (2) certain actions the Defendant is required
to take to ensure compliance with the terms of the proposed Final
Judgment; (3) the Defendant's obligations to cooperate with the United
States in its investigations of the promulgation of any future rules
similar to the Recruiting Rules; and (4) oversight procedures the
United States may use to ensure compliance with the proposed Final
Judgment.
A. Prohibited Conduct
Section IV of the proposed Final Judgment prevents the Defendant
from establishing, maintaining, or enforcing any ``Transfer Student
Recruiting Rule,'' ``Early Decision Incentives Rule,'' or ``First-Year
Undergraduate Recruiting Rule'' or any similar rules. The proposed
Final Judgment defines each of those terms in Section II, and the
definitions are intended to correspond with the rules described in
Section II.B of this Competitive Impact Statement.
Furthermore, Section IV of the proposed Final Judgment requires
that the Defendant abolish any ``Transfer Student Recruiting Rule,''
``Early Decision Incentives Rule,'' or ``First-Year Undergraduate
Recruiting Rule'' currently within its ethics rules.
B. Required Conduct
Section VI of the proposed Final Judgment sets forth various
mandatory procedures to ensure the Defendant's compliance with the
proposed Final Judgment, including a requirement to provide officers,
directors, and management with copies of the proposed Final Judgment
and annual briefings about its terms. Additionally, Section VI requires
the Defendant to provide notice to its members about this action that
includes a description of the terms of the proposed Final Judgment, the
Competitive Impact Statement, and the Complaint. Finally, Section VI
requires the Defendant's Antitrust Compliance Officer to promptly
notify the United States upon receipt of any complaint that the terms
of the proposed Final Judgment have been violated.
C. Compliance
To facilitate monitoring of the Defendant's compliance with the
proposed Final Judgment, Section VII permits the United States, upon
reasonable notice and a written request:
(1) Access during the Defendant's office hours to inspect and copy,
or at the option of the United States, to require the Defendant to
provide electronic or hard copies of, all books, ledgers, accounts,
records, data, and documents in the possession, custody, or control of
the Defendant, relating to any matters contained in the proposed Final
Judgment; and (2) to interview, either informally or on the record, the
Defendant's officers, employees, or agents.
Additionally, Section VII requires the Defendant, upon written
request of the United States, to submit written reports or responses to
interrogatories relating to any of the matters contained in the
proposed Final Judgment.
D. Enforcement and Expiration of the Final Judgment
The proposed Final Judgment contains provisions designed to promote
compliance and make the enforcement of the Final Judgment as effective
as possible. Paragraph IX(A) provides that the United States retains
and reserves all rights to enforce the provisions of the proposed Final
Judgment, including its rights to seek an order of contempt from the
Court. Under the terms of this paragraph, the Defendant has agreed that
in any civil contempt action, any motion to show cause, or any similar
action brought by the United States regarding an alleged violation of
the Final Judgment, the United States may establish the violation and
the appropriateness of any remedy by a preponderance of the evidence
and that the Defendant has waived any argument that a different
standard of proof should apply. This provision aligns the standard for
compliance obligations
[[Page 1337]]
with the standard of proof that applies to the underlying offense that
the compliance commitments address.
Paragraph IX(B) provides additional clarification regarding the
interpretation of the provisions of the proposed Final Judgment. The
proposed Final Judgment was drafted to restore the competition the
United States alleged was harmed by the Defendant's challenged conduct.
The Defendant agrees that it will abide by the proposed Final Judgment,
and that it may be held in contempt of this Court for failing to comply
with any provision of the proposed Final Judgment that is stated
specifically and in reasonable detail, as interpreted in light of this
procompetitive purpose.
Paragraph IX(C) of the proposed Final Judgment provides that if the
Court finds in an enforcement proceeding that the Defendant has
violated the Final Judgment, the United States may apply to the Court
for a one-time extension of the Final Judgment, together with such
other relief as may be appropriate. In addition, to compensate American
taxpayers for any costs associated with investigating and enforcing
violations of the proposed Final Judgment, Paragraph IX(C) provides
that, in any successful effort by the United States to enforce the
Final Judgment against the Defendant, whether litigated or resolved
before litigation, that the Defendant will reimburse the United States
for attorneys' fees, experts' fees, and other costs incurred in
connection with any enforcement effort, including the investigation of
the potential violation.
Paragraph IX(D) states that the United States may file an action
against the Defendant for violating the Final Judgment for up to four
years after the Final Judgment has expired or been terminated. This
provision is meant to address circumstances such as when evidence that
a violation of the Final Judgment occurred during the term of the Final
Judgment is not discovered until after the Final Judgment has expired
or been terminated or when there is not sufficient time for the United
States to complete an investigation of an alleged violation until after
the Final Judgment has expired or been terminated. This provision,
therefore, makes clear that, for four years after the Final Judgment
has expired or been terminated, the United States may still challenge a
violation that occurred during the term of the Final Judgment.
Finally, Section X of the proposed Final Judgment provides that the
Final Judgment will expire seven years from the date of its entry,
except that after five years from the date of its entry, the Final
Judgment may be terminated upon notice by the United States to the
Court and the Defendant that the continuation of the Final Judgment is
no longer necessary or in the public interest.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment neither impairs
nor assists the bringing of any private antitrust damage action. Under
the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the
proposed Final Judgment has no prima facie effect in any subsequent
private lawsuit that may be brought against the Defendant.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and the Defendant have stipulated that the
proposed Final Judgment may be entered by the Court after compliance
with the provisions of the APPA, provided that the United States has
not withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least 60 days preceding the
effective date of the proposed Final Judgment within which any person
may submit to the United States written comments regarding the proposed
Final Judgment. Any person who wishes to comment should do so within 60
days of the date of publication of this Competitive Impact Statement in
the Federal Register, or the last date of publication in a newspaper of
the summary of this Competitive Impact Statement, whichever is later.
All comments received during this period will be considered by the U.S.
Department of Justice, which remains free to withdraw its consent to
the proposed Final Judgment at any time before the Court's entry of the
Final Judgment. The comments and the response of the United States will
be filed with the Court. In addition, comments will be posted on the
U.S. Department of Justice, Antitrust Division's internet website and,
under certain circumstances, published in the Federal Register.
Written comments should be submitted to: Chief, Technology and
Financial Services Section Antitrust Division, United States Department
of Justice, 450 Fifth Street NW, Suite 7100, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against NACAC. The United
States could have continued the litigation and sought preliminary and
permanent injunctions against NACAC. The United States is satisfied,
however, that the requirements of the proposed Final Judgment will
preserve competition among colleges for the provision of college
services to college applicants and potential transfer students in the
United States. Thus, the proposed Final Judgment achieves all or
substantially all of the relief the United States would have obtained
through litigation, but avoids the time, expense, and uncertainty of a
full trial on the merits of the Complaint.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a 60-day comment period, after which the Court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. 16(e)(1). In making that determination,
the Court, in accordance with the statute as amended in 2004, is
required to consider:
(A) the competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration of relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a
determination of whether the consent judgment is in the public
interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory
factors, the Court's inquiry is necessarily a limited one as the
government is entitled to
[[Page 1338]]
``broad discretion to settle with the defendant within the reaches of
the public interest.'' United States v. Microsoft Corp., 56 F.3d 1448,
1461 (D.C. Cir. 1995); United States v. U.S. Airways Grp., Inc., 38 F.
Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the ``court's inquiry is
limited'' in Tunney Act settlements); United States v. InBev N.V./S.A.,
No. 08-1965 (JR), 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11,
2009) (noting that a court's review of a consent judgment is limited
and only inquires ``into whether the government's determination that
the proposed remedies will cure the antitrust violations alleged in the
complaint was reasonable, and whether the mechanism to enforce the
final judgment are clear and manageable'').
As the U.S. Court of Appeals for the District of Columbia Circuit
has held, under the APPA a court considers, among other things, the
relationship between the remedy secured and the specific allegations in
the government's complaint, whether the proposed Final Judgment is
sufficiently clear, whether its enforcement mechanisms are sufficient,
and whether it may positively harm third parties. See Microsoft, 56
F.3d at 1458-62. With respect to the adequacy of the relief secured by
the proposed Final Judgment, a court may ``not to make de novo
determination of facts and issues.'' United States v. W. Elec. Co., 993
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F.
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F.
Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at
*3. Instead, ``[t]he balancing of competing social and political
interests affected by a proposed antitrust consent decree must be left,
in the first instance, to the discretion of the Attorney General.'' W.
Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ``The court
should bear in mind the flexibility of the public interest inquiry: the
court's function is not to determine whether the resulting array of
rights and liabilities is one that will best serve society, but only to
confirm that the resulting settlement is within the reaches of the
public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks
omitted). More demanding requirements would ``have enormous practical
consequences for the government's ability to negotiate future
settlements,'' contrary to congressional intent. Id. at 1456. ``The
Tunney Act was not intended to create a disincentive to the use of the
consent decree.'' Id.
The United States' predictions about the efficacy of the remedy are
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at
1461 (recognizing courts should give ``due respect to the Justice
Department's . . . view of the nature of its case''); United States v.
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In
evaluating objections to settlement agreements under the Tunney Act, a
court must be mindful that [t]he government need not prove that the
settlements will perfectly remedy the alleged antitrust harms[;] it
need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'') (internal
citations omitted); United States v. Republic Servs., Inc., 723 F.
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to
which the government's proposed remedy is accorded''); United States v.
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A
district court must accord due respect to the government's prediction
as to the effect of proposed remedies, its perception of the market
structure, and its view of the nature of the case''). The ultimate
question is whether ``the remedies [obtained by the Final Judgment are]
so inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest.' '' Microsoft, 56 F.3d at 1461
(quoting W. Elec. Co., 900 F.2d at 309).
Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its complaint, and does not authorize the Court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways,
38 F. Supp. 3d at 75 (noting that the court must simply determine
whether there is a factual foundation for the government's decisions
such that its conclusions regarding the proposed settlements are
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the `public
interest' is not to be measured by comparing the violations alleged in
the complaint against those the court believes could have, or even
should have, been alleged''). Because the ``court's authority to review
the decree depends entirely on the government's exercising its
prosecutorial discretion by bringing a case in the first place,'' it
follows that ``the court is only authorized to review the decree
itself,'' and not to ``effectively redraft the complaint'' to inquire
into other matters that the United States did not pursue. Microsoft, 56
F.3d at 1459-60.
In its 2004 amendments to the APPA, Congress made clear its intent
to preserve the practical benefits of using consent judgments proposed
by the United States in antitrust enforcement, Public Law 108-237 Sec.
221, and added the unambiguous instruction that ``[n]othing in this
section shall be construed to require the court to conduct an
evidentiary hearing or to require the court to permit anyone to
intervene.'' 15 U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d
at 76 (indicating that a court is not required to hold an evidentiary
hearing or to permit intervenors as part of its review under the Tunney
Act). This language explicitly wrote into the statute what Congress
intended when it first enacted the Tunney Act in 1974. As Senator
Tunney explained: ``[t]he court is nowhere compelled to go to trial or
to engage in extended proceedings which might have the effect of
vitiating the benefits of prompt and less costly settlement through the
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of
Sen. Tunney). ``A court can make its public interest determination
based on the competitive impact statement and response to public
comments alone.'' U.S. Airways, 38 F. Supp. 3d at 76 (citing Enova
Corp., 107 F. Supp. 2d at 1
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: December 20, 2019
Respectfully submitted,
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Ryan Struve,
United States Department of Justice, Antitrust Division, Technology and
Financial Services Section, 450 Fifth Street NW, Suite 7100,
Washington, DC 20530, Telephone: (202) 514-4890, Email:
[email protected].
[FR Doc. 2020-00213 Filed 1-9-20; 8:45 am]
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