Is CFAI in violation of antitrust law?

Quote from Competition law, known in the United States as antitrust law, has three main elements: 1. prohibiting agreements or practices that restrict free trading and competition between business entities. This includes in particular the repression of cartels. 2. banning abusive behavior by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal, and many others. I am not not a legal expert but is CFA Institute not in violation (at least in the spirit of the text) of the point number 2? Let me explain further. A poll on AF homepage gives following results: What materials are you using to prepare for the CFA exam? Study Notes Exclusively 45% Textbooks Exclusively 16% Textbooks and Study Notes 39% This means that 45% of the candidates do NOT use the Text books at all. Is forcing the candidates to purchase this material not an example of “predatory pricing, tying, price gouging, refusal to deal”? I may be completely wrong but I see a similarity in CFA Institute selling books and Microsoft bundling WMP. Also, CFA Institute claims networking to be a major benefit of CFAI membership. Is networking a euphemism for cartelization in some sense? And why just CFA Institute? For that matter, the entire Ivey League concept sounds highly concentrated and elitist. Again, I am not questioning the morality/ethics of it… I am really trying to understand if they might run a risk legally! Looks like a violation of the spirit of law to me.

To add, would CFA Institute try to force candidates to purchase these books even if there were 100 other competitors in the industry? Say HHI was less than .001! Comments welcome.

anupamjain008 Wrote: ------------------------------------------------------- > This means that 45% of the candidates do NOT use > the Text books at all. Is forcing the candidates > to purchase this material not an example of > “predatory pricing, tying, price gouging, refusal > to deal”? No. The CFA has a legitimate argument that the “source” books they provide give a more accurate depiction of the content of the exam than 3rd party materials. There is nothing illegal or anti-competitive about this. If they had a software program that you essentially were force to buy to learn the exam material, and that program was incompatible with competing programs, thereby creating a monopoly that allowed the company to price gouge its customers, that would be anti-competitive. In the case of CFAI, you are free to buy 3rd party study materials if you wish, and they are more or less “compatible” with the exam. Yes, it’s a shiesty move, since they overcharge for the books, but you might just call that a good business model. The Ivy League is not anti-competitive either. In theory, admission is supposed to be based strictly on merit, in which case it is the definition of highly competitive. Who knows in practice if it is really based on only merit (evidence suggests no), but there is nothing “illegal” happening here either.

The product of CFAI is ‘CFA Charter’ that it provides to eligible candidates. This product has plenty of competition in market from institutes that provide MBA, M.S. in Finance, M.S. in economics and so on. So, there is a plenty of choice for someone, who wants to go for IB as her/his career. CFA charter is NOT monolopizing IB career path. Now, once someone has chosen going for CFA Charter among other choices, then they have to pay for the text and other tools that it wants you to buy. It is not in violation of any law. If someone finds it costly, then they can evaluate other choices. You are viewing the whole thing as being a CFA program candidate and viewing it from deep inside. If you take a bigger view from outside, you will not find them in violation (in spirit or otherwise) of any anti-trust law. Comments?

I agree with rus1bus. No one has to take the CFA exams. It’s not like the SAT, for instance, that every college-bound student needs to take.