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The College Board is trying to buy Carnegie Dartlet, a company that advises colleges on enrollment management.

The move could be controversial. The College Board is a nonprofit organization and Carnegie Dartlet is for-profit. More important, a major part of the College Board’s revenue comes from selling colleges the names of potential students (who have taken one of the College Board’s exams). If the College Board in some way favored clients of Carnegie Dartlet, that could give Carnegie Dartlet an edge. People with industry ties report that they have been called by the Federal Trade Commission, which is interested in determining whether the College Board would have such an advantage.

While the FTC does not comment on its investigations, the agency’s website said that it “is committed to preventing mergers and acquisitions that are likely to reduce competition and lead to higher prices, lower quality goods or services, or less innovation.” The FTC will “investigate market dynamics to determine if the proposed merger will harm consumers. When necessary, the FTC may take formal legal action to stop the merger, either in federal court or before an FTC administrative law judge.”

Asking tough questions, of course, is not an indication of the FTC’s views on a purchase.

One person contacted by the FTC on this matter, who asked not to be identified, said they were first approached a few weeks ago and heard more recently from college officials who had been approached.

The FTC asked a lot of questions on “restricted access,” this official said.

This official said there are ways a purchase “could be relatively benign,” with the College Board setting up Carnegie Dartlet as, for all purposes, an independent business. But “there is likely a long term that the future of college search has to be done in a closed College Board ecosystem.”

While the growth of test-optional admissions has meant that the SAT (and its competitor the ACT) have fewer names to sell, colleges continue to buy names of students who took the tests, the official said. Of the deal, the official said, “I can’t figure out how this is good for colleges or for students.”

ACT officials declined to comment on the report of the purchase, as did Carnegie Dartlet.

The College Board sent a letter to members Thursday night confirming the deal as “a possible acquisition, which has been approved by our Board of Trustees and has the strong support of many of our member advisors.”

The College Board notice described Carnegie Dartlet as “a marketing and enrollment management company with a 35-year track record of helping higher education institutions connect with students throughout the college going process. As one of the smaller organizations in the field, they have distinguished themselves with their laser focus on higher ed needs and outcomes for students. They have the best-in-class capabilities, resources, and relationships that enhance our ability to connect students and colleges in a rapidly changing admissions landscape in which more than 60 percent of colleges are struggling to fill their classes.”

The letter also said, “The Federal Trade Commission is reviewing this acquisition and approval is an open question. We are working to provide them the best information possible about how this deal will benefit students and our members. We are concerned that so much of the infrastructure on which higher education relies is now held by a small group of large private equity owners. We think it is important for at least some of that infrastructure to be owned by member-led, not-for-profit organizations like ours.”

Criticism of the List Industry

This is a time of increased scrutiny of the student list industry.

A report released in September by the Institute for College Access & Success said, “Student lists play an essential role in the college access process because the U.S. higher education market is structured as a national voucher system that depends on providers to go out and find the students … Unfortunately, the contemporary student list business is characterized by the systematic exclusion of underrepresented students, the certain death of the college entrance exam, and the looming takeover by corporate and private equity interests.”

The lead researcher on the report was Ozan Jaquette, an associate professor of higher education at the University of California, Los Angeles.

In an interview Thursday, Jaquette said that he hadn’t heard of the College Board’s plans, but “I am not shocked, because College Board (and ACT) have been steadily moving into the enrollment management consulting market for the last five to 10 years. The strategy has been to leverage their oligopoly position in the student list business to provide universities that pay for consulting more detailed information about the prospects they are trying to recruit than can be obtained from purchased student lists.”

Jaquette added that “basically, universities that pay Carnegie/College Board for enrollment management consulting would get access to data about prospects from the College Board student list databases that other enrollment management consulting firms cannot provide.”

In the FTC’s “anticompetitive-behavior world, this is an example of ‘vertical restraints to competition,’ using market position in an upstream/downstream market to gain competitive advantage, as opposed to ‘horizontal restraints to competition,’ price fixing within a market, or buying up all your competitors in a market.”

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