P12.3 Price Fixing. An antitrust case launched more than a decade ago sent
tremors throughout the academic community. Over the 1989 -91 period, the
Department of Justice (DOJ) investigated a number of highly selective
private colleges for price fixing. The investigation focused on overlap group
meetings comprised of about half of the most selective private colleges and
universities in the United States. The group included 23 colleges, from small
liberal arts schools like Colby, Vassar, and Middlebury to larger research
universities like Princeton and MIT. DOJ found that when students applied
to more than one of the 23 institutions, school officials met to coordinate the
exact calculation of such students financial need.
Although all of the overlap colleges attempted to use the same need
formula, difficult-to-interpret information from students and parents
introduced some variation into their actual need calculations. DOJ alleged
that the meetings enabled the colleges to collude on higher tuition and to
increase their tuition revenue. The colleges defended their meetings, saying
that they needed coordination to fully cover the needs of students from lowincome
families. Although colleges want able needy students to add diversity
to their student body, no college can afford a disproportionate share of needy
students simply because it makes relatively generous need calculations.
Although the colleges denied DOJs price-fixing allegation, they discontinued
their annual meetings in1991.
A. How would you determine if the overlap college meetings resulted in
price fixing?
B. If price fixing did indeed occur at these meetings, which laws might be
violated?