October 27, 2017
An online platform used by more than 1 million students every year to apply to hundreds of colleges — including Harvard, Stanford, Rice, and Howard University — faces Round Two on a rival’s claims that it muscled other application services out of the market.
There has been an explosion in college applications in recent years, fostered by the ease with which students can use the same application form for different schools. The parties in the suit disagree over whether this is good or bad for consumers and competition.
CollegeNET Inc.’s complaint is against the most-used online platform, The Common Application (TCA). CollegeNET says TCA conspired with 549 nonprofit colleges and universities, which aren’t named as defendants, to homogenize the market and exclude rival systems.
‘‘We’ve been arguing for many years that it was a restraint of trade,’’ Brian Taylor, managing director at the admissions consulting firm Ivy Coach, told Bloomberg Law. ‘‘CollegeNET had the chutzpah to file a lawsuit — and we firmly support them.’’
The U.S. Court of Appeals for the Ninth Circuit on Oct. 23 revived antitrust claims by CollegeNET stating that TCA monopolized the college application process using a number of anticompetitive practices (CollegeNET, Inc. v. The Common Application, Inc., 2017 BL 380032, 9th Cir., No. 15-35443, 10/23/17).
The district court earlier dismissed CollegeNET’s suit for lack of standing, concluding that it failed to allege an antitrust harm to consumers. But the appeals court, in a short memorandum opinion, said CollegeNET’s allegations of competitive injury are enough to clear the first hurdle in litigation.
TCA President Jenny Rickard said the Ninth Circuit’s decision hampers her company’s ability to improve the college application process. ‘‘To date, our nonprofit membership association has spent several million dollars defending itself against these frivolous claims by a for-profit, privately-held company,’’ she said in a statement provided to Bloomberg Law. ‘‘We would prefer to dedicate our resources to continued innovation and expanding our outreach and access programs.’’
The Ninth Circuit’s decision doesn’t necessarily mean that CollegeNET gets to begin costly discovery against TCA. First, the district court has to consider all of TCA’s arguments against CollegeNET’s complaint, which it didn’t take up in the first round because its decision on standing.
‘Sea Change’ The core of CollegeNET’s claims is that TCA used restrictive membership rules and exclusive pricing to force other application providers out of the business. The complaint says TCA charged colleges a lower price if they agreed to use only TCA for applications, and it forced schools to agree never to accept an admissions method cheaper than TCA’s application.
CollegeNET alleged that the ‘‘Common Application has orchestrated a sea change in the student application process, turning a once vibrant, diverse, and highly competitive market into a straitjacketed ward of uniformity.’’
The company said it lost more than 200 customers to TCA over the past decade. Elite colleges in particular are closed to CollegeNET. It claimed TCA is ‘‘poised to eliminate competition in the broader market within a few short years.’’
Each year, more than a million students file some 4 million college applications using TCA’s common online application, according to TCA’s website. At present, 751 colleges and universities accept TCA’s form.
TCA argued in court filings that consumers actually benefit from its efforts because the wide acceptance of TCA’s form at colleges and universities greatly increased the number of applications that college-bound students can realistically file. ‘‘Conduct that increases output is encouraged and protected, not prohibited, by antitrust laws,’’ TCA said in its motion to dismiss CollegeNET’s complaint.
Ivy Coach’s Taylor said TCA’s application platform is superior to CollegeNET’s in terms of ease of use. But he still believes TCA’s practices violated free-market principles.
CollegeNET launched a raft of antitrust claims against TCA, including horizontal restraint of trade in the admissions and online college application processing markets, exclusive dealing, illegal tying, monopolization, attempted monopolization, and conspiracy to monopolize several different application-related markets.