The ABA & the Accreditation Cartel: A Worthy Target for the Trump Antitrust Enforcers
The ABA settled cartel charges with DOJ in the 90s. It still restricts competition. Can the FTC/DOJ bring back competition in legal education? Perhaps the new FTC ABA policy is just the start.
FTC Chairman Ferguson upset some people in the antitrust bar this week with a Tweet. The tweet announced a new policy at the FTC that political appointees (Bureau Directors) would no longer be able to attend American Bar Association (ABA) meetings and the FTC would no longer financially support FTC staff attending ABA events. And now I feel bad. Today’s Competition on the Merits is not about why I feel bad about it. And it is not even about the new FTC policy – at least not directly. It is about the ABA’s history of running afoul of the federal antitrust laws and why they might have some concerns about the FTC or DOJ knocking on their door once again. For starters, did you know that the ABA was a defendant in a Section 1 case and entered into a consent decree with the DOJ? Or that it admitted to violating it? More about that in a second.
First, let’s talk a bit about where the change in FTC policy came from. And maybe a bit about why I feel bad about it. But before we do that — subscribe, send to friends, or upgrade to paid.
I feel bad because a few weeks ago I suggested here on Competition on the Merits that Chairman Ferguson get out on social media more. What I actually said was a bit more prescient. I observed that Chairman Ferguson was a different animal than the antitrust and FTC bar is used to when it comes to Chairmen. I described him as “I think Ferguson is the most “outside” the ABA Chairman or Commissioner the FTC has had.” I mean that as a compliment, of course. He does not give a ton of speeches and ignores the ABA, including the Antitrust Section of the ABA – a sort of standard platform for enforcers from Lina Khan to Tim Muris and everyt in between. And we closed that week’s column with a bit of a discussion about the adjustment that was coming for the bar (and maybe Chairman Ferguson) when it comes to communicating the FTC agenda and engaging with the public it regulates:
I was right, obviously. But I did not know how right I was. And I’m obviously joking when I insinuate that Chairman Ferguson’s big week on X had anything to do with my suggestions. In 2025 an agency Chairman should be on social media so people understand what is happening at the agency. It is a good thing. (I’m also obviously joking when I suggest I feel responsible for any of it!). But I did suggest Chairman Ferguson would likely continue to ignore the ABA circuit and focus on other means of communicating with the public, including X:
Well, when you are right, you’re right. Fast forward to just last week and Chairman Ferguson was on X like never before. Let’s put aside the back and forth with Commissioner Bedoya on grocery prices for now. Chairman Ferguson’s tweet responding to an ABA declaration that the Trump-Vance Administration was engaged in “wide scale affronts to the rule of law” made clear that not only would he be sending his regrets to the ABA Antitrust Law Spring Meeting – but would be petitioning for a divorce between the FTC and the ABA more generally:
His letter to the FTC did the same:
And lest you come away with the view that the objections were just to the “Big ABA” as it is sometimes described within that institution, and NOT the Antitrust Law Section, here is the rest of the letter:
I agree with some of this. The ABA Antitrust Section is an organization that produces considerable value. I recommended that antitrust law students join it, attend events, and engage with folks throughout the profession. And Chairman Ferguson’s critique concedes the ABA produces some benefits, including the Antitrust Section. That is not surprising. Lots of left wing institutions offer some value, e.g. I’ve heard some people say nice things about Yale Law School. I’m more persuaded by the partisan advocacy critique than the regulatory capture critique – but I worked for Google for a long time and held leadership positions in the Antitrust Section. So I might not be the right audience for that critique! But the same Antitrust Section gave Lina Khan and friends countless keynotes to amplify their Big Tech slaying agenda and Barry Lynn a stage on which to call the antitrust bar equivalent to Xi Jinping. Anyway, your mileage may vary on that particular critique.
But the partisan advocacy one sure does have some bite. And not just with the Big ABA. I’ve got my own unrelated beef with the Antitrust Law Section – but I have seen them firsthand discriminate against conservative institutions like Scalia Law and conservative antitrust scholars. But now is not the time or place for those receipts.
Look, Chairman Ferguson, Commissioner Holyoak – who joined the Chairman by announcing she will not attend ABA events, and presumably Commissioner Meador will all be fine without the ABA or the Antitrust Section. And the ABA will be fine without them. The new policy cuts funding for travel to ABA boondoggles and prohibits Bureau Directors from speaking at events. Staff can do what they want. Everyone will survive this. That is not what I want to talk about today.
I want to talk about the ABA as an antitrust-relevant institution. What does the ABA have to do with competition? For my own part, I jumped on twitter to express some sympathy for Chairman Ferguson’s position, but my mind immediately went to antitrust:
Today’s Competition on the Merits discusses the ABA not just as a partisan political and advocacy institution but as a marketplace participant and an entity with considerable market power. In other words, the ABA is an institution for which the antitrust laws are quite relevant and not just as the topic of discussion for panels and cocktail parties. Indeed, did you know the ABA was an antitrust defendant in a Section 1 case under the Sherman Act brought by the DOJ Antitrust Division and entered into a consent decree with the Division? No? Let’s start there.
United States v. American Bar Association
Back in June 1995, Joel Klein was the Assistant Attorney General of the Antitrust Division. On behalf of the Clinton Administration, Mr. Klein filed a complaint alleging that the American Bar Association violated Section 1 of the Sherman Act. The Complaint alleged that the ABA conducts the accreditation process for law schools throughout the United States. The ABA decides who is allowed to participate in the legal education business – a business the DOJ alleged was worth about $2 billion back in 1994.
The DOJ alleged that legal educators had “captured” the accreditation process and accumulated significant market power:
The DOJ alleged the ABA used that market power to engage in several anticompetitive practices, from fixing law professor salaries (and you thought labor market antitrust cases were new) to preventing competition from proprietary law schools:
The DOJ also alleged the ABA promulgates a variety of rules that restrict competition from non-ABA accredited schools:
My favorite – the DOJ further alleged that the ABA protects law professors by setting collusive maximums for teaching loads and “encouraging” compensated leaves of absence.
The antitrust implications are clear here. The ABA is an organization of law schools competing in the market for legal education against one other. The ABA uses its accreditation power both to exclude competition from “outside” the cartel, to punish those that would defect from the cartel terms, and to coordinate salaries and other terms.
Unsurprisingly, the ABA entered into the consent decree in 1996. Ever defiant, the ABA acknowledged violating the 1996 consent decree and paid fines in 2006. The DOJ press release spells out the variety of ways in which the ABA violated the decree:
So that is a fun and interesting history of the ABA running afoul of the antitrust laws and flouting a consent decree over twenty years ago. So what is the ABA up to these days?
The ABA Accreditation Cartel Continues in Law Schools and Higher Education Generally
Colleges and universities, including law schools, compete on many margins for paying customers we call students. They compete with advertising, services, amenities – maybe a good football team, educational quality, and more. One estimate suggests colleges spend at least $10 billion per year competing to attract students. Higher education is a big and lucrative business.
How are consumers in the higher education market doing? Not so great. (Graph credit to Mark Perry):
One significant reason is the same accreditation cartel targeted by the Antitrust Division in 1996.
The accreditation power protects incumbent colleges and universities from competition that arises in other markets. Many colleges and universities are non-for-profit institutions. But non-profits do not enjoy an exemption from the antitrust laws – as practitioners who have followed hospital and health care antitrust know well. Hiding behind the accreditation power granted to the ABA by the Department of Education, colleges and universities are able to coordinate on price and other dimensions of competition in higher education, punish cartel defectors, and raise barriers to entry for new entrants and rivals.
Meiners and Morriss point out that the accreditation cartel harms higher education customers not only with higher prices but with lower quality as well. Various ABA rules imposed and enforced through the accreditation process force institutions to offer fairly homogenous products and discourage experimentation and product differentiation. Just for example:
The accreditation cartel has harmed higher education customers not just through higher prices but also reducing innovation and quality. It is not a surprising result – this is exactly the combination of results one would expect to see in other markets fettered by long term and durable market power. But that’s not all.
The ABA Accreditation Cartel Degrades Educational Quality In Favor of Indulging In Its Own Political Preferences
Chairman Ferguson’s letter begins with identifying the problem: the variety of political positions the ABA has taken over time as a partisan advocacy group, including its shameful treatment of Justice Clarence Thomas. But Chairman Ferguson also recognizes the exercise of the ABA’s accreditation market power in imposing DEI requirements in the legal academy.
These are not just political choices by the ABA, but competitive decisions that influence the quality of the product that law schools offer to their students. And the ABA’s market power prohibits the ability of law schools to compete on these dimensions by differentiating themselves. Again, it is the students that suffer.
No doubt some of these competitive decisions would be treated as protected speech and be granted Noerr-Pennington immunity from antitrust liability. But not all of them. And it is difficult to believe that enabling collusion that prohibits any and all competition on these margins in a billion dollar industry is lawful.
A number of commentators have noticed this problem. Here are Jacobson & Markind in 2022:
I agree. And I observed first hand the role of ABA accreditation bodies influencing the quality of offerings at my own law school, Scalia Law, as a faculty member for two decades. Satisfying ABA accreditation demands meant that Scalia Law had to bend to the DEI and related demands of the ABA, but also to sacrifice its own view of the optimal curricular programming for its students. It restricted the law school from giving students full access to the rich pool of practitioners in the DC area willing to share their knowledge with the students as adjunct professors. It also viewed with suspicion various aspects of how the law school decided to compete on core offerings like constitutional law because they did not fit the ABA dogma.
Jacobson & Markind conclude:
I note that the FTC competition advocacy program has been an important voice in the world of state-imposed barriers to competition in the legal profession for a long time. I would hope that Chairman Ferguson would consider deploying them in force to this particular problem.
No doubt the ABA has the right to make its views known and have its voice heard in the marketplace for ideas. But there is no reason for it to enjoy the fruits of government-granted market power at the expense of consumers in the higher education market while doing so.
My friend Ilya Shapiro has a recent book Lawless: The Miseducation of America’s Elites, that explores this issue in law schools specifically. Shapiro exposes the intellectual rot inside law schools that has been festering for some time:
“are taught to question the legitimacy of the law … itself. It’s bizarre, it’s dangerous, because if all of our institutions … are irrevocably imbued with racism, sexism, patriarchy, all of these different things, they need to be deconstructed and reconstructed in a year-zero revolutionary zeal. It’s very much like the Chinese Cultural Revolution or the French Revolution.”
His exploration of the social causes and consequences of the problem is must-read material for anyone interested in the state of higher education. From weak deans to mission creep and the bloat of administrative bureaucracy to the long-term consequences of politically homogeneous faculties taking over law schools for decades, Shapiro’s account is a wake up call about the state of our legal institutions present and future. FWIW, Mark Pullman’s book review of Lawless is excellent and a great place to start in understanding the social and political change in our institutions of higher education.
But it is also a monopoly problem. Specifically, many of these consequences – including higher prices, lower quality, and monopoly rents that allow these institutions to indulge political preferences rather than compete on the merits – are the predictable consequence of state-granted monopoly power.
Monopoly problems suggest the solution is competition. Here are a few:
State supreme courts have conferred the monopoly status upon the ABA as an accrediting body, the FTC ought to deploy fully its competition advocacy program to engage with states to allow competition.
This FTC competition advocacy effort could extend not only to accreditation but also to state level unauthorized practice laws and other rules that allow lawyers to protect themselves from competition. This is an area where the FTC has had a longstanding presence and considerable expertise.
The Department of Education also confers monopoly power to the ABA over law school accreditation. Shapiro suggests that President Trump’s Department of Education could require law schools to adopt the pro-speech Chicago Statement.
What about a lawsuit? Could the DOJ Antitrust Division bring a Section 1 claim against the ABA challenging the accreditation standards themselves?
You bet it could. If anything, given the Supreme Court decision in NCAA v. Alston, antitrust protection for institutions that set the terms of competition for groups of competitors have weakened substantially over time. There is no reason to believe that the ABA’s various accreditation practices have changed over time despite the consent decree.
There are complicated issues including state action and Noerr-Pennington immunity for a variety of accreditation practices (e.g. rules promulgated by a state supreme court are sovereign acts of the state and thus likely immune under Parker). But those issues largely do not arise in the context of the accreditation standards themselves nor do they arise in ABA rules and regulations that impose restrictions on competition for faculty.
To be sure, there is at least some case law suggesting otherwise and concluding that the accreditation decisions themselves are protected speech – but that case (Zavaletta v ABA) predates the ABA’s consent decree. More importantly, it is a remarkably flawed analysis. Not only does the analysis conflict with the decades of standard setting cases that have emerged since Zavaletta was decided in 1989, but the notion that accreditation is merely speech and that compliance with ABA standards is a voluntary choice by law schools with no consequences seems quaint if not absurd. Certainly I can tell you no law school treats the ABA site visit that way. The risk of non-accreditation is life or death for the ability to stay in the market and compete. And the ABA controls that. I cannot imagine a modern court finding otherwise.
Only an investigation would uncover all of the relevant facts here. And perhaps we will see one. It would certainly be good for all consumers in the higher education market, including law schools, to chip away at the ABA’s monopoly power anyway that can be achieved. Some methods of doing so require changes in the law or persuading state actors to change their course. But antitrust law can also play an important role. And it may yet. The ABA’s own decade long campaign to wield its power against conservative institutions, and to exercise consistently its voice in a way to alienate and target conservatives from Clarence Thomas to any and all associated with the Trump-Vance administration, do not do anything to reduce that risk. The Antitrust Section of the ABA does have a number of really good lawyers available. “Big ABA” may want to call one of them sooner rather than later.
See you next week! And as always, please upgrade to paid, subscribe, send to friends, and shoot me a note telling me what you want to read about next.