Another Antitrust Violation in the Making at the Ivies? - International Center for Law & Economics
Focus Areas:    Antitrust

Another Antitrust Violation in the Making at the Ivies?

Harvard College is cutting its early admissions program. According to the New York Times, which is pleased with this move, Harvard’s purported reasons for cutting the program are as follows:

It will make the system fairer because students from sophisticated backgrounds and affluent high schools are far more likely to apply for an early admission than minority students or those from high schools with few counselors. It will help reduce the frenzy that has high school students worrying about college choices in their junior years. It will give admissions officers another semester of performance to consider instead of basing early admission on the junior-year record. And there will be the collateral benefit of encouraging high school seniors to keep studying well into the spring instead of goofing off the minute they receive early admission.

That’s all well and good. But then the Times makes a remark that’s a tad troubling: “By delaying its shift until next fall, Harvard hopes that other institutions will follow it.” Similarly, the Harvard Gazette reports that “Harvard will … delay the shift to a single admissions deadline until the fall of 2007, so that other institutions wishing to make a change will have time to adjust their processes in the same admissions cycle.”

Hmmm….

If Harvard wants to (1) make its system fairer and more open to students from less sophisticated and affluent backgrounds, (2) reduce the frenzy facing 11th graders, (3) lengthen the academic records presented to its admissions officers, and (4) encourage its admittees to study during their last semester of high school, then why wouldn’t it start its new system immediately? And why would it care whether its competitors maintain their early admissions programs?

It seems to me that the only reason Harvard would care what its competitors do with regard to early admissions is that it doesn’t want to lose candidates to those competitors, and it realizes it may do so if it makes its admissions protocol less attractive than its competitors’. In other words, Harvard’s unwillingness to act unilaterally suggests that it is seeking a tacit (or perhaps express) agreement with its rivals not to compete for students by offering a difficult-to-administer admissions protocol that many students find attractive.

The Ivies have struggled with antitrust issues before. They used to hold annual meetings to compare financial aid packages offered to admitted students, purportedly for the purpose of ensuring that the aid was distributed equitably. When, in response to a Justice Department challenge, they finally halted that practice, competition for talented admittees increased pretty dramatically. According to a 1993 NYT report (Times Select subscription required):

In the two years since an antitrust action led Ivy League institutions to stop setting common limits on awards to scholarship applicants, the colleges are increasingly being drawn into bidding wars for promising students, officials say.

A student can now receive financial aid offers that vary as much as $5,000 from college to college in the Ivy League. “We have certainly seen in the past two years more instances of significant divergences in financial aid awards,” said James O. Freedman, the president of Dartmouth College in Hanover, N.H. “What it does to us is a student calls us up and says, ‘This institution gave me $2,000 or $4,000 or $5,000 more than you did.’ That rarely happened before.”

The lesson is that competition works to benefit students — even in the Ivy League. If Harvard really thinks the prevailing early admission system is detrimental to Harvard College (for the reasons it cites), then it should eliminate the system immediately, without regard to its competitors’ actions. The fact that it’s giving its competitors a chance to sign on suggests that it’s seeking an agreement to limit competition, and that’s bound to result in a reduction of attractive options for students.

(Incidentally, law school administrators seem to be similarly insensitive to antitrust concerns, as my colleague Royce Barondes and I have documented here.)