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Multi-College Agreement Defended in Antitrust Case

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NEXT month, the Massachusetts Institute of Technology (MIT) is expected in court.

The Cambridge, Mass., university will be defending itself against United States Department of Justice charges of violating federal antitrust laws.

The charges stem from a nearly 40-year-old practice of cooperation between the eight Ivy League schools, MIT, and 14 other colleges.

Known as the Overlap Group, officials from these institutions met each spring to agree on uniform financial-aid offers to students accepted at more than one school.

The Justice Department launched an investigation into this practice three years ago and concluded that it amounted to improper collusion and price-fixing.

"Students and their families are entitled to the full benefits of price competition when they choose a college," then-Attorney General Dick Thornburgh said about the case. "This collegiate cartel has denied them the right to compare prices and discounts among schools, just as they would in shopping for any other service or commodity."

The Wall Street Journal, which first disclosed the "Ivy cartel" in 1989, recently published an article suggesting that the Overlap Group collusion extended beyond financial-aid packages to cooperation in setting tuition and faculty salaries.

Although admitting no wrongdoing, all the institutions involved, except MIT, settled with the Justice Department last May. Since the settlement, the Overlap Group has been dismantled and the colleges have agreed to discontinue their annual meeting.

But MIT is fighting the Justice Department charges. The university claims that the case is a misapplication of the 1890 Sherman Antitrust Act.

Earlier this month, MIT filed a brief opposing the government's motion for a summary judgment without trial. "Overlap was founded upon commonly held academic values and principles about the role of higher education in society: that education is a `public good' that ... should not be a privilege reserved for the wealthy...," the brief states.

"The elimination of Overlap will, over time, seriously undermine the principles of merit admission and need-based aid," says the brief.

Overlap participants argue that cooperation between universities is necessary to avoid bidding wars in which schools use financial-aid packages as leverage.


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