Tech Company Rekindles Lawsuit Against Common Application (CHE)

Tech Company Rekindles Lawsuit Against Common Application (CHE)

DECEMBER 21, 2015

The legal fight between two rivals in the college-admissions market is headed for another round.

CollegeNET Inc., a technology company that builds application-processing systems for colleges, has appealed the dismissal of its complaint against the Common Application, a nonprofit organization that runs an online admissions form used by hundreds of institutions worldwide. In a brief filed this month in the U.S. Court of Appeals for the Ninth Circuit, CollegeNet asserts the group has violated federal antitrust laws — a claim that a federal judge rejected last spring.

As the plaintiff challenges the Common Application in the courts, it’s also building a new product of its own. Recently, the Coalition for Access, Affordability, and Success hired CollegeNET to create a shared online application that participating colleges would offer as an alternative to the Common App. It’s too soon to say whether the controversial plan will shake up the admissions process, as supporters hope. For now, the continuing litigation is a reminder: Delivering college applications to colleges is a big business.

CollegeNET, based in Portland, Ore., filed its lawsuit last year. In legal documents, the company said it had lost more than 200 college customers over the previous 10 to 15 years due to what it described as the Common Application’s “anticompetitive and exclusionary conduct.” The company has taken issue, for instance, with the Common Application’s fee structure, which for years rewarded colleges that used its application exclusively. CollegeNET also alleged that “application churn” — students using the Common App to apply to more and more colleges, regardless of their chances of admission — was detrimental to all participants.

Although the plaintiff’s lawyers argued that the Common App had limited competition in ways that harmed both colleges and applicants, Judge Marco A. Hernández of the U.S. District Court in Portland, did not find “sufficient factual allegations of harm to either group of consumers.” As for the proliferation of applications that the Common Application has helped enable, Judge Hernández found it “equally probable that the ‘application churn’ is precisely what colleges and applicants desire — a system that facilitates increased applications in an efficient way.”

In its appeal, CollegeNet argues that the judge erred in his ruling. The Common Application, it says, has used various tactics to “monopolize the market” and exclude competitors. Another claim: Colleges that use the Common App have “colluded to limit their spending on processing services to below competitive levels.”

In an email to The Chronicle on Friday, Jim Wolfston, CollegeNET’s founder and chief executive, described several changes he hoped would result from the lawsuit. One is the elimination of the Common Application’s “equal treatment” requirement, under which member colleges agree to promote all application options equally, charging the same fee for each one.

“We think admissions officers ought to be able to state their preferences clearly,” Mr. Wolfston wrote, “and that vendors should earn market position on quality and innovation.”

At least some of the policies CollegeNET is challenging have changed since the lawsuit was filed. For instance, the Common Application previously charged lower rates to colleges that used its application exclusively than to colleges offering two or more ways to apply. But, as CollegeNET’s appeal notes, the organization has “largely eliminated penalties for non-exclusivity.”

Earlier this year, the Common Application introduced a new pricing plan, which is being phased in over five years. It’s based on varying levels of functionality and service — and not on exclusivity. Eventually, the organization says, all participating colleges will pay the same fee for the same product.

In a written statement provided by the Common Application, Thane D. Scott, a Boston-based lawyer representing the group, called CollegeNET’s lawsuit misguided. “Students are best served,” he said, “when the limited resources of charitable entities like the Common Application are used to enhance innovation, improve affordability, bolster customer service, and facilitate educational access, rather than being wasted in the prolonged defense of fruitless and opportunistic claims asserted by uncompetitive, for-profit companies.”