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The National Collegiate Athletic Association’s (NCAA’s) longstanding cartel-like arrangements once again are facing serious legal scrutiny.  On June 9 a federal antitrust trial opened in Oakland featuring college athletes’ attempt to enjoin the NCAA from exploiting the athletes’ names, images, and likenesses (“rights of publicity”) for profitRights of publicity are a well-recognized form of intellectual property.  Although the factual details concerning the means by which NCAA institutions may have extracted those rights (for example, from signed waivers that may have been required as a condition for receipt of athletic scholarships) remain to be developed, a concerted NCAA effort to exploit the athletes’ IP, if proven, would be highly anticompetitive.  Consistent with the TOTM tradition of highlighting challenges to NCAA competitive arrangements, let’s look at what’s at stake.

The NCAA is involved in major sports-related revenue-producing projects with its corporate partners, such as Electronic Arts (EA), a $4 billion company that produces video games.  The money is big – EA’s NCAA Football game alone is reported to bring in over $200 million a year in gross revenues.  Although the NCAA has denied using player likenesses in video games, the creators of the NCAA Football series have indicated that actual athletes’ jersey numbers and attributes are used, a fact apparently known to NCAA executives.  Moreover, recent separate $20 million and $40 million settlements agreed to by the NCAA and EA in suits brought by college athletes provide additional indications that the NCAA may be aware that it has exploited college players’ rights of publicity.

So what is the antitrust angle?  In dealing with student athletes, the NCAA, which represents the interests of its member colleges, acts like a monopsony cartel, as Judge Posner has noted, and as Blair and Harrison have explained in detail.  Anticompetitive monopsony buyer agreements have long been struck down by the courts as Sherman Act violations, as in Mandeville Farms and in National Macaroni Manufacturers v. FTC, and occasionally have been the subject of criminal prosecution.

This does not necessarily mean, however, that all restrictions the NCAA places on student athletes run afoul of the antitrust laws.  As the Supreme Court made clear in the 1984 NCAA case, the federal antitrust laws apply to the NCAA, but competitive restraints may pass muster if they are justifiable means of fostering competition among amateur athletic teams, such as uniform rules defining the conditions of a sports contest, the eligibility of participants, or the sharing of responsibilities and benefits integral to the NCAA’s joint venture.

Like the anticompetitive restrictions on member colleges’ separate television contracts struck down by the Supreme Court in NCAA, however, the NCAA’s profiting from student athletes’ rights of publicity is not vital to the preservation of balanced collegiate amateur competition.   Likewise, it is not needed to avoid the payment of student salaries that some might argue smacks of disfavored “professionalism” (although others would argue it promotes healthy competition and avoids exploitation of athletes).  In contrast, a policy of vindicating athletes’ right of publicity enables them to capture the value of the intellectual property generated by their accomplishments, and thus incentivizes outstanding athletic achievements, consistent with the legitimate ends of NCAA competitions.  Proof of a concerted effort by the NCAA to deny this benefit to student athletes and instead to share the IP-generated proceeds only with member institutions would, if shown, appear to lack any cognizable efficiency justification, and thus be ripe for antitrust condemnation.

Whatever the outcome of the current rights of publicity litigation, the NCAA may expect to face antitrust scrutiny on a number of fronts.  This is as it should be.  While the organization clearly yields efficiencies that benefit consumers (such as establishing and overseeing rules and standards for many collegiate sports), its inherent temptation to act as a classic cartel for the financial benefit of its members will not disappear.  Indeed, its incentive to seek monopoly profits may rise, as the money generated by organized athletics and related entertainment offshoots continues to grow.  Accordingly, antitrust enforcers should remain vigilant, and efforts to obtain NCAA-specific statutory antitrust exemptions, even if well-meaning, should be resisted.

Paul Fain has an interesting update today on the issue of two-tier pricing for California’s community college system. Santa Monica College rocked the boat in March when it announced plans to start using a two-tier pricing schedule that would charge higher tuition rates for high-demand courses.

Santa Monica–and most all community colleges in California apparently–have been slammed with would-be students looking to take classes that would help prepare them for better jobs or for further education and training (that would prepare them for better jobs).  The problem is that state funding for community colleges has been drastically reduced, thereby limiting the number of course offerings schools can offer at the subsidized tuition rate of $36 per credit hour. Santa Monica had the radical idea (well, radical for anyone that fails to understand economics, perhaps) of offering additional sections of high-demand courses, but at full-cost tuition rates (closer to $200 per credit hour).

Students protested. Faculty at other community colleges complained. Santa Monica College relented. So students don’t have to worry about paying more for courses they will not be able to take and faculty at other colleges don’t have to worry about the possibility of more students wanting to go to their schools because the overflow tuition at Santa Monica drives students to find substitutes. Well, that, and no more worries for those faculty at schools who charge even more than $200 for students to get those core courses that they cannot get into at their community college. It didn’t matter much anyhow, since most agreed that Santa Monica College’s proposal would have violated the law.

Now there is a proposal before the California legislature that would allow schools to implement two-tier pricing, but only for technical trade courses, not for high-demand general education-type courses.

Aside from complaints that “the state should be giving away education–even if they are not” (which are the most inane because they have nothing to do with the issue at hand), there are a few other arguments or positions offered that just cause one to scratch one’s head in wonder:

1) Fain reports that Michelle Pilati, president of the Academic Senate of California Community Colleges, asserted that “two-tiered tuition is unfair to lower-income students because it would open up classes to students who have the means to pay much more.” Apparently, Ms. Pilati would prefer all students have equal access to no education than to open up more spaces (to lower-income students) by opening up more spaces to higher-income students at higher prices. Gotcha.

2) The Board of Trustees at San Diego Community College seems to agree, having passed a resolution opposing the proposed legislation because it “would limit or exclude student access based solely on cost, causing inequities in the treatment of students”. Apparently the inequity of some students getting an education and some not is more noble because explicit out-of-pocket costs are not involved and other forms of rationing are used. And yet…

3) According to Fain,  Nancy Shulock, director of the Institute for Higher Education Leadership and Policy at California State University at Sacramento, asserts “wealthier students have a leg up when registering for courses. She said research has found that higher-income students generally have more ‘college knowledge’ that helps them navigate often-complex registration processes. That means wealthier students could more quickly snag spots in classes, getting the normal price, while their lower-income peers would be more likely to pay the higher rates under a two-tiered system.”

So, community colleges have created overly complex registration systems that disadvantage lower-income students. Yet, all that suggests is that the current system already punishes lower-income students because wealthier students can more easily “snag” the limited number of subsidized sections. Perhaps community colleges could make their enrollment processes less complex?

Regardless the fate of the “two-tier pricing” legislation, there is already a two-tier system in place; only the current two-tier plan prevents people from getting educations at any price.

I find it interesting that many on the left, so intent on maintaining their anti-market narratives, distort reality so badly that black is white and up is down–and “government” is “corporations.”

I’ve highlighted this before when discussing the misdirected criticisms (and solutions) of self-described privacy advocates who point the finger at Google when really they should be concerned about the government.

Now comes Brian Leiter referring us to an article on “Corporate Attacks on Law School Clinics.” That’s the title of his post which contains nothing more than a heated admonition to read a linked article, so the title says it all:  Corporations are attacking law school clinics (and this is a huge problem that should concern everyone).  And I have no doubt many corporations are upset with many law school clinics.  But what’s so fascinating is how, when you click through to the article, you discover that the actual attacks on law school clinics are, in every single example adduced in the story, actually emanating from governments.  It’s pretty amazing.  Here are the relevant snippets from each example in the article, but I recommend reading the whole thing:

In spring 2010, a law-clinic lawsuit against a $4 billion poultry company triggered a legislative effort to withhold state funds from the University of Maryland unless its law school provided the legislature with sensitive information about clinic clients and case activities.

The attack plan included the introduction of legislation that would forfeit all state funding if a university offered certain types of law-clinic courses.

The first occurred in 1968 at the University of Mississippi, where the appointments of two untenured professors were terminated following complaints that their new clinical program participated in a desegregation lawsuit.

In efforts to terminate the program, clinic opponents sponsored a bill in the legislature to withdraw state funding for the entire law school.

In 1993, then-governor Edwin Edwards was so upset at statements the clinic’s director made that the governor threatened to deny financial assistance to state residents attending the university and to prohibit Tulane medical students from working in any state hospital unless the director was fired.

A few years later, the clinic’s success in representing a low-income, minority community opposed to a proposed chemical plant led then-governor Mike Foster and business interests to threaten to revoke Tulane’s tax-exempt status and deny it access to state education trust-fund money, to organize an economic boycott of Tulane, and to refuse to hire its graduates.

When the university still refused to terminate the course, clinic opponents successfully persuaded the Louisiana Supreme Court to impose restrictions on whom law school clinics can assist and what kinds of representation students can provide.

When state legislators expressed disapproval of a law school clinic’s representation of citizens concerned about a proposed highway, university officials began charging the clinic for the university’s overhead costs, prevented it from approaching funders unless it agreed to avoid certain cases that might upset legislators, and pressed it to separate from the school and move off campus.

The clinical program at Rutgers University is defending itself against a lawsuit brought by a developer, who was defeated in a clinic case and is now seeking to use the state’s public records law to gain access to internal clinic case files that would otherwise be beyond the reach of a party to a lawsuit

A dispute in Michigan this past winter demonstrates that attacks also can occur when students get in the way of powerful government interests. The district attorney in Detroit, upset with the efforts of a University of Michigan innocence clinic to exonerate a man it alleged was wrongfully imprisoned for ten years, sought to force the students to testify at trial against their client, an unprecedented effort to interfere in the students’ attorneyclient relationship.

Perdue persuaded legislators to attach a rider to the university’s appropriations that conditioned $750,000 in funding on submission of a report detailing clinic cases, clients, expenditures, and funding, much of which is confidential information.

An even harsher attack occurred in Louisiana this past spring, where the Louisiana Chemical Association (LCA) pushed for legislation, subject to narrow exceptions, that would forfeit all state funds going to any university, public or private, whose clinics brought or defended a lawsuit against a government agency, represented anyone seeking monetary damages, or raised state constitutional claims. The bill also would have made clinic courses at the state’s four law schools subject to oversight by legislative commerce committees.

This isn’t cherry-picking.  Unless I made a mistake, this is every single example of “attacks on law school clinics” in the article.  And every single one involves government actions or the threat of government actions.  Wow.  How on earth could anyone read this article and feel comfortable calling this a problem of corporations?  Don’t get me wrong–I understand that there are often corporate interests behind these actions, spurring them on.  But to call this a “corporate” problem rather than a “government” problem–with the implicit call for government to do something about the problem–is to fail so utterly to understand the problems of government power that it boggles the mind.

Like Brian Leiter, I find this list troubling.  I am appalled at how much inappropriate  government interference this represents.  But it is simply delusional to call this a problem of corporations.  You want to fix the problem?  Rein in the ability of governments to interfere to thoroughly with private life that special interests don’t have access to such a powerful and, often, invincible bludgeon.