Watching the Overlap Case

It could be the beginning of the end--or the end of the beginning.

On Friday, September 17, a federal appeals court overturned a district court ruling that MIT, in sharing information about financial aid with the Ivy League schools, had violated antitrust laws, sending the case back to the lower court for a rehearing.

Last Thursday, the Justice Department acknowledged without further explanation that it had ended a five-year antitrust investigation into the methods certain colleges use to set faculty salaries, financial aid and tuition.

This Monday, The New York Times ran a staff editorial suggesting that the case against MIT be dropped. The Boston Globe followed suit on Wednesday.

The question now: Does this new order signify yet another stage of the government's battle against the practice of sharing financial aid information, known as "overlap," or a convenient end to an increasingly more complicated process?

History

When the Justice Department first brought suit against the eight Ivy League schools and MIT in 1991 charging antitrust, the Ivy League schools, including Harvard, soon signed a decree consenting to the end of the practice of sharing information.

MIT was the only school that went to court. In the first hearing at the U.S. District Court in Philadelphia, the Justice Department's case seemed sealed with a ruling that MIT had violated the Sherman Antitrust Act.

MIT argued that the social welfare benefits of the practice out-weighed the anti-competitive effects. Overlap, the institute said, allowed schools to set one uniform amount of financial aid for each student admitted to more than one of the schools involved. This prevented bidding wars for sought-after students, allowing the schools to spread financial aid funds to more needy students, according to MIT.

The district judge refused to consider this side of the argument. In a 2-1 ruling, however, the appeals court ordered the case back for examination of MIT's claim--with the dissenting judge stating that overlap was not a violation of the Sherman Act.

What happens next is as yet uncertain--particulary because the current presidential administration and attorney general didn't initially bring the lawsuit.

Justice Department spokesperson Daniel O. Hamilton earlier this week refused even to say whether dropping the case was a theoretical possibility at this point.

"We are faced with the possibility of requesting a hearing en banc [in front of all the judges on the appellate court], asking for a simple rehearing at the appeals court, seeking writ of certiori from the Supreme Court," Hamilton said. "And there is the option of directly obeying the opinion of the court."

Despite a story earlier this week in The Boston Globe reporting that MIT officials were hopeful that the case would be dropped, MIT spokesperson Kenneth D. Campbell said this week that he has heard nothing new about the case. But, he added, the option of dropping the case seemed the most sensible to him at this point.

"Our analysis of the situation, this is a case in which...in our estimate, there was poor management of antitrust [legislation," Campbell said. "What we said would happen has happened--bidding wars. The best thing is to drop it."

Dartmouth College President James O. Freedman '57, according to a Globe article last week, said his school would seek to overturn the consent decree if MIT wins its case. But the other Ivy League presidents, including President Neil L. Rudenstine, have yet to indicate that they will act in the matter.

Rudenstine did say last week, however, that he agreed with the latest decision--although he said at the time that he does not expect a quick end to the situation.

"It's an enlightened decision," he said. "It's very good that the court has been willing to widen its angle of vision."