MIT to rest case in antitrust trial

Nearing the end of their two-week trial, lawyers for the Massachusetts Institute of Technology spent the past week defending MIT against Justice Department charges that the school broke antitrust laws. MIT announced it might complete its testimony today by calling its expert economist, Dennis Carlton of the University of Chicago, to testify that Overlap did not increase prices for students or revenues for Overlap members and therefore did not produce a price-fixing situation. This week, Thane Scott, lead lawyer for MIT, challenged the government's assertion that MIT broke the law by meeting with Ivy League school officials to determine financial aid awards and share data on students accepted to more than one school. The so-called Overlap process existed from the late 1950s until 1990, when the Ivy League schools agreed not to continue the meetings at the government's behest. MIT refused to follow suit and the Justice Department pursued the case to trial. The government's expert economist, Keith Leffler of the University of Washington, testified last week that Overlap was a form of price-fixing because Overlap schools on average offered less financial aid to families. During cross examination, the Justice Department appeared to damage the testimony of an MIT official who refuted Leffler, arguing that families were required to contribute less on average under the Overlap system. Stanley Hudson, MIT's financial aid director, said Tuesday that he had compiled a survey that showed MIT's required family contributions for blacks, Mexican Americans and American Indians tended to be lower than those computed by the College Scholarship Service. The CSS methodology was the basis for the Overlap methodology, but there were differences. For example, while CSS did not seek a contribution from a non-custodial parent in a divorced family, Overlap schools did. On cross-examination by Bruce Pearson, the government's lead lawyer, Hudson conceded that the average MIT family contribution for these groups actually would have been a bit higher than he said, because of the way he calculated the numbers. Pearson then questioned Hudson on an article in MIT's university-produced newspaper which quoted Hudson as saying that 1988 Overlap meetings "resulted in a net increase of financial aid offered by MIT." Pearson pointed out that the data actually appeared to reflect a decrease in grant aid by more than $52,000 because MIT generally raised the required family contributions during Overlap meetings that year. When asked Tuesday about the same data, Hudson said he could not tell whether family contributions went up or down. He said the information was "internally inconsistent" and that his earlier statement was based on "information other than this data." Finally Judge Louis Bechtle asked Hudson if his belief that was based on "any papers or documents" or on "just a feeling." Hudson affirmed it was based on a feeling. Much of MIT's defense focused on "social policy arguments" that Overlap helped society by allowing colleges to maintain need-blind admissions -- where students are admitted without regard to resources -- and thereby ensure greater socio-economic diversity. All along, MIT has maintained that what the government terms a restraint of free trade is really a way of restraining harmful competition for prized students. MIT's lawyers argued that the Overlap agreements kept schools from awarding more financial aid than a student needs because they all agreed not to offer merit scholarships and met to arrive at common methods for computing aid, using the federal system as a guide. Several witnesses testified that an end to Overlap would make it difficult for schools to avoid offering students merit aid -- something they portrayed negatively because of the possibility that such aid could deprive needy students of money necessary to attend the college. Another point stressed by MIT involved the differences between for-profit companies and non-profit organizations. Several MIT witnesses disparaged comparisons between companies -- which clearly could engage in price-fixing -- and universities. Robben Fleming, the past president of the University of Michigan who also sat on the board at Chrysler Corp., said: "In a for-profit company you must make a profit. In the university culture it is very different. No one thinks of a university as a business."

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