Antitrust: Mitigate the Risk

Federal antitrust laws, including the Sherman Antitrust Act, the Clayton Antitrust Act, and the Federal Trade Commission Act, broadly aim to promote marketplace competition and prevent unfair business practices that let one or more competitors dominate a particular industry to the detriment of consumers and other industry competitors. The education industry is not immune.

Educational Antitrust Issues

Several well-publicized antitrust actions were aimed at education. In 2020 the National Association for College Admission Counseling (NACAC) settled a case brought by the Department of Justice (DOJ) over rules that allegedly violated the Sherman Act by severely restricting NACAC members’ ability to recruit applicants and transfer students. Private antitrust lawsuits filed in 2022 and in 2024 claimed, among other things, that “elite” private institutions colluded with each other to limit financial aid to students. Ten schools sued in the first lawsuit settled in 2024 for $284 million and two more reached settlement agreements in early 2025 for more than $35 million.

Other practices can run afoul of antitrust laws, including “anti-poaching” agreements (in which K-12 schools or higher ed institutions agree not to recruit faculty, other employees, or students from each other) and agreements to limit employee compensation or benefits. These agreements don’t have to be formal, explicit, or written to violate the law. Schools also can commit antitrust violations by sharing certain sensitive student or employee data (such as wage information) with each other.

Reduce Your Risk With Proactive Steps

Antitrust litigation is complex and costly, but increasing public anger over rising costs of education and a perceived absence of transparency from schools may only fuel future lawsuits. Higher ed institutions and independent K-12 schools alike should take steps to avoid anticompetitive practices and reduce their chances of being sued for alleged antitrust violations (or strengthen their defenses and mitigate potential damages if litigation occurs). Failing to do so, by contrast, could lead to potentially crippling financial penalties and severe reputational harm.

Understand the Legal Landscape

School officials don’t have to be legal experts, but a general understanding of antitrust law and how it may apply to educational institutions can help you spot potential problems and recognize when your school needs legal advice.

The DOJ and the Federal Trade Commission enforce antitrust laws, although they usually coordinate their investigations and tend to focus on different areas. Criminal prosecutions are relatively rare and can only be brought by the DOJ, but the potential financial penalties are severe, and in egregious cases, people involved in violations can face up to 10 years in prison. Both agencies can impose significant fines for civil violations, and people impacted by antitrust violations can sue. Under the Clayton Act, for example, plaintiffs can recover three times their actual damages.

Check Your Policy

Does your school have a written policy and/or guidelines mandating employee compliance with antitrust laws and prohibiting certain conduct? If not, consider working with legal counsel to create them. These rules might, for example, require officials to make decisions about tuition and financial aid independently and without consulting or working with other schools.

Consider State Laws

Most states have antitrust laws (modeled on but not necessarily identical to federal laws) applicable to commerce within their borders, and states often work cooperatively with federal agencies to pursue antitrust violations. State laws typically allow lawsuits by private individuals. In addition, state attorneys general can sue to enforce their own laws, or they might sue on behalf of the state’s citizens to enforce federal antitrust laws.

While federal law generally preempts conflicting state law, most state antitrust laws were designed to complement rather than conflict with federal laws. As a result, an institution could potentially find itself facing separate lawsuits in federal and state courts over the same alleged anticompetitive conduct.

Train Personnel

Educate your employees, especially those in admissions, financial aid, and human resources, to recognize and avoid potentially risky conduct. What might appear to them as “cooperation” or “collaboration” between peer schools could amount to unlawful collusion under antitrust laws.

Incorporate this topic into your regular employee training cycle. Although employees don’t need to know the intricacies of antitrust law, they should be able to recognize behavior that can cause problems for your K-12 school, college, or university.

During training:

• Review your relevant written policies or guidelines.
• Specifically advise employees to avoid formal or informal agreements with other schools regarding admissions practices (such as an explicit promise or implied understanding not to recruit students who commit to attend other institutions), tuition/financial aid packages, employee compensation packages, or sharing sensitive data.
• Explain how employees can report concerns related to antitrust issues.
• Emphasize the possible penalties for antitrust violations, including significant fines and the risk of serious, long-term damage to your school’s reputation.

Additional Resources

NAIS: Proceed With Caution — How Antitrust Law Affects Schools