Antitrust suit versus MIT goes to trial

The Massachusetts Institute of Technology will stand trial today on charges that it violated antitrust laws by conspiring with other schools to fix student financial aid packages. The University is not directly involved in the trial, but an MIT victory might eventually allow the University and other schools to share more financial aid information with each other. The federal government alleges that MIT engaged in price fixing, and reduced competition, by sharing proposed student aid packages with Ivy League school officials in order to coordinate aid offers and avoid bidding wars for students accepted at more than one of the schools. MIT argues, however, that antitrust laws do not restrict private colleges from collectively deciding how to distribute financial aid money, and insists that meetings are the best way to insure the money goes to students who need it most. Unbridled competition for students, MIT asserts, would prove more damaging in the long run because it would likely force schools to offer some students more than they need, decreasing the amount of aid available to truly needy students. The government apparently has not bought this argument, noting in a memorandum filed earlier this year that "MIT's defense that price fixing is necessary to achieve a social policy goal must also be rejected." The trial grew out of a two-year investigation by the Justice Department into the practices of MIT and the eight Ivy League schools -- known collectively as the Ivy Overlap Group -- of swapping aid packages and formalas for determining aid. Last summer, the University and the seven other Ivy League colleges -- Brown, Columbia, Cornell, Dartmouth, Harvard, Princeton and Yale -- reached a settlement with the government to avoid expensive and protracted litigation. The schools signed a consent decree forbidding them from meeting to share financial aid information for a ten year period. None of the schools conceded any wrongdoing in the decree. Of the schools, only MIT refused to sign the decree, and the Justice Department, led by then-Attorney General Dick Thornburgh, pursued the case against MIT. A question has emerged during MIT's lone fight: if MIT wins, will that invalidate the consent decree and allow the schools to resume trading financial aid data? Arthur Makadon, a lawyer for the University, said last month that an MIT victory would have "no legal effect" on the consent decree. He said the schools bound by the decree would have to ask a judge to amend the agreement, but that it was "not absolutely clear" that a judge would do so, even if MIT prevails. The government is awaiting the outcome of the lawsuit before proceeding against other schools it has investigated for possible price fixing. Those schools are part of the broader Overlap Group, consisting of 23 elite private colleges. The trial is expected to last two weeks. MIT asked U.S. District Judge Louis Bechtle last year to move the trial to Boston, where MIT is located and the financial aid meetings in question took place. Bechtle denied the request.

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