Shifting Economy Calls for Prompt Antitrust Audits
Client Alert
Takeaways from U.S. v. National Association for College Admission Counseling
On April 17, 2020, a Final Judgment was entered settling allegations in a complaint filed by the Antitrust Division of the Department of Justice (DOJ) against the National Association for College Admission Counseling (NACAC). In its complaint, the DOJ alleged that three sections of the NACAC Code of Ethics and Professional Practices (CEPP) constituted unreasonable restraints of trade in violation of Section 1 of the Sherman Act. These sections involved mandatory uniform practices regarding college transfer student recruiting, early admission incentives, and first year undergraduate recruiting. As part of the settlement, NACAC agreed to delete the sections of the CEPP challenged by the DOJ, agreed to implement a new and comprehensive antitrust compliance program, and consented to the entry of a Court order subjecting the association to charges of contempt for future violations of the provisions of the final judgment.
For trade associations and professional societies, this case should serve as a red flag that prompts immediate review of their bylaws, ethics codes and antitrust compliance programs. This decision highlights the reality that sometimes longstanding practices and policies that have never been questioned may in fact violate the antitrust rules.
The NACAC was established in 1937 and has more than 13,000 members. One of its main responsibilities is to establish a CEPP identifying basic principles for professional staffs of secondary institutions and colleges to abide by when helping students transition from high school to college. NACAC holds college fairs at which students, parents, education professionals and college representatives discuss the application process and the programs and costs associated with various colleges. In a recent year, more than 675,000 students and parents attended NACAC fairs. All the professionals and school representatives in attendance agreed to be bound by the CEPP, a 15-page public document approved by the NACAC Assembly. There were no allegations of secret agreements to engage in antitrust violations.
It does not appear that NACAC leaders intended to violate the antitrust laws, as it is the DOJ’s policy to sanction individuals who intentionally violate antitrust laws and no individuals were sanctioned in this case. More likely, NACAC simply assumed that its CEPP was consistent with the antitrust laws because they had been in effect for a considerable period of time and had never been challenged. However, legal interpretations of the antitrust laws and government enforcement priorities change over time. The periodic review of association practices, policies, and codes – particularly those intended to apply on an industry-wide basis – is an important component of an effective antitrust compliance program.
The basic antitrust statute, the Sherman Act, was enacted in 1890 and its basic language has not changed in 130 years. The Sherman Act has been interpreted to outlaw “unreasonable” restraints on trade, though what constitutes “unreasonable” has been left to the Courts to decide based on economic analysis. So, as our economy changes, a practice that was “reasonable” under prior antitrust decisions may become “unreasonable” based not only on economic analysis but also on the enforcement priorities of the DOJ and the manner in which a judge defines what she or he considers “reasonable.”
All trade associations and professional societies should have an antitrust compliance program. The NACAC case demonstrates the need to periodically audit not just the provisions of an association’s antitrust compliance program, but also to review longstanding policies and practices to ensure they remain consistent with the applicable laws. Failure to regularly do so may result in serious consequences, as demonstrated by the NACAC final judgment.
For further information contact Steve Fellman sfellman@gkglaw.com or David Monroe dmonroe@gkglaw.com.
