Brown Investigated as Congress Launches Price Fixing Probe of Ivy League

Brown Investigated as Congress Launches Price Fixing Probe of Ivy League

Brown University is facing a Congressional investigation.

The Senate and House Judiciary Committees sent a joint letter to the eight Ivy League schools, questioning whether the schools are acting inconsistently with U.S. antitrust laws when setting their tuition prices.

The letter was sent to Brown President Christina Paxson.

GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST

The universities “appear to collectively raise tuition prices while engaging in price discrimination by offering selective financial aid packages to maximize profit,” according to the letter.

“The U.S. House and Senate Committees on the Judiciary are conducting oversight of the adequacy and enforcement of U.S. antitrust laws. We are particularly concerned that Ivy League member institutions appear to collectively raise tuition prices while engaging in price discrimination by offering selective financial aid packages to maximize profit. These institutions establish the industry standard for tuition pricing, creating an umbrella effect for all colleges and universities to justify higher tuition costs than they could otherwise charge in a competitive market," states the letter signed by Jim Jordan, Chairman Committee on the Judiciary; Scott Fitzgerald Chairman Subcommittee on the Administrative U.S. House of Representatives;  Charles Grassley Chairman Committee on the Judiciary; and Mike Lee Chairman, Subcommittee on Antitrust, U.S. Senate Competition Policy, and Consumer Rights U.S. Senate.

"By apparently engaging in anticompetitive pricing practices, Brown University may be acting inconsistent with U.S. antitrust laws, and we appreciate your cooperation in our examination of whether legislative reforms are necessary to address this conduct,” the letter continues. 

 

Price Competition in Focus

The seven-page letter goes on, "Section 1 of the Sherman Antitrust Act makes certain agreements among competitors illegal.3 Agreements that limit competition on price, output, or quality of products and services can be illegal.4 This is true regardless of “whether the agreement is carried out at all.” New technologies, such as the use of a shared algorithm or software that uses competitors’ nonpublic data to coordinate decision making, can facilitate these potentially illegal agreements. Coordinating with noncompetitor third parties to facilitate collusion can also be illegal under the antitrust laws." 

"In addition to collusion, federal antitrust law makes certain actions illegal even absent the existence of market power. For example, it can be illegal to lock consumers into one market and then force the purchase of related goods and services in a secondary market. It is also per se illegal for certain members of boards of directors to sit on the boards of competitors. Federal antitrust law also states that it can be illegal to price discriminate, especially when information asymmetries enable businesses to charge the highest price the consumer could afford to pay," states the letter. 

"Elite higher education institutions have previously engaged in collusive pricing practices. In 1989, amid skyrocketing tuition prices, the Department of Justice (DOJ) launched a price fixing investigation into the eight Ivy League member institutions and the Massachusetts Institute of Technology, and subsequently filed a lawsuit against them in 1991. The DOJ alleged that these institutions violated the Sherman Act by collectively determining the maximum price each admitted student could afford to pay, which denied students “the right to compare prices and discounts among schools” and eliminated competition in financial aid awards," the letter further states.

The deadline for the delivery of documents requested by the members of Congress is April 23.

 

Brown Facing Multiple Federal Reviews

Brown already faces a pause by the Trump administration for $510 million in federal funds.

Grants tied to Brown and Brown Health and other Rhode Island institutions have been canceled.

In addition, the U.S. Department of Education has a review of Brown University relating to alleged antisemitism.