Competition watchdog consults schools on SIMS break clause

ESS SIMS will allow schools to apply for a break clause from three-year software contracts amid an ongoing CMA investigation

ESS SIMS will allow schools to apply for a break clause from three-year software contracts amid an ongoing CMA investigation

17 Nov 2022, 14:29

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Schools will be consulted on proposals to exit contracts with England’s largest school management information system (MIS) provider a year early.

The Competition and Markets Authority (CMA) seeks to wind up its 10-month investigation into “suspected breaches of competition law” by Education Software Solutions (ESS) SIMS.

The probe was launched in April, the same month ESS scrapped its normal one-year rolling contracts in favour of three-year deals.

An announcement of the changes in autumn last year prompted a backlash from schools who felt they did not have enough time to find new deals.

At the time, the Department for Education said it was looking into the change and encouraged “all schools to pause before agreeing to this new contract whilst we investigate”, as first revealed by Schools Week.

On Thursday, the CMA said the firm – which is owned by Parent Pay – had offered to give legally binding assurances which would allow some schools to apply for a new 12-month break clause to escape their current three-year deal with ESS.

The “commitments” would apply to schools given “insufficient” time to switch providers before the new contracts were brought in, while applications would go through independent adjudicators.

The CMA has outlined that schools would be informed of decisions by the adjudicator by the end of March next year, and given the option to end new three-year contracts with ESS on 31 March 2024.

In effect, it means schools will only be able to escape one year of the contract.

Watchdog believes break clause could resolve issues

The watchdog said it believed the proposal would address its competition concerns by “giving affected schools the choice to exit their three-year contract and switch to another MIS supplier, facilitating competition”.

The CMA is proposing to formally accept the commitment. If this happens, its investigation into ESS and its parent company would end without a decision as to whether or not the Competition Act had been infringed.

The break-clause proposal would not constitute an admission of any infringement by ESS, the CMA said.

But in its notice of its intention to accept the commitments, the CMA said it was its “preliminary view that [ESS’s prior] conduct constituted the imposition of unfair terms and trading conditions”.

It added that this “may restrict competition by foreclosing the market to competitors and new entrants”.

An “original” six-month break clause was announced by ESS in January. It gave schools until March 31 to find a new supplier, but they had to apply for the early exit by February 20.

The CMA said schools may have found it “particularly challenging” to switch within the timescales set by the firm given they were “resource and time constrained” following the pandemic and amid the reintroduction of national school tests in 2022.

A “significant” proportion of ESS customers that responded to a CMA survey said they were unable to switch MIS provider before the start of the new three-year contract in April or with the six-month break clause, the watchdog said.

It added that a “significant proportion” of respondents said they needed 10 or more month to switch provider.

Schools have until December 8 to offer views

Under the Act, the CMA must consult third parties likely to be impacted before formally accepting the ESS proposal.

Schools and other organisations who could be affected by the legally binding assurances are now able to send in comments over a three-week period. The consultation will close on December 8.

Views are likely to cover the eligibility criteria to apply for the new break clause as well as “matters that may affect the effective implementation of the proposed commitments”.

The CMA said it would consider any representations made in response to the consultation before it makes a final decision on whether or not to accept the assurances.

EES was sold by Capita for £400 million in 2020. According to analysis by the Bring More Data blog, the market share of schools using the system has slipped from around 84 per cent of schools in 2012 to around 70 per cent.

ESS said it “welcomed” the announcement.

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