Competition watchdog warns private schools over fee-fixing collusion during coronavirus outbreak

The competition watchdog has warned private schools against colluding over price fixing during the coronavirus outbreak, a leaked letter has revealed. 

The Competition and Markets Authority (CMA) has written to private school representatives saying it has “become aware that individuals at some schools may be engaging in discussions with each other” about the level of discounts and refunds on school fees that could be applied.

The letter, sent on April 17 and shared with Schools Week by the Private School Policy Reform group, accepts that increased collaboration might be necessary in times of crisis. 

But it adds: “However, this does not give a ‘free pass’ to businesses to engage in non-essential collusion, even where such businesses are charitable in nature.”

The CMA states that it “will not tolerate” independent schools agreeing prices or exchanging with their competitors commercially sensitive information on future price fixing or business strategies “where this is not necessary to meet the needs of the current situation”. 

“Such behaviour would almost certainly infringe competition law,” they add.

The Independent Schools Council said it knows of “no evidence” that schools are deliberately sharing information with each other and that the matter has been “resolved amicably with the CMA”.

Those schools found to have fixed their fees can be fined as much as 10 per cent of their turnover, the CMA warns. 

The CMA reminds representatives about how in 2006 it’s  predecessor authority – the Office of Fair Trading – found that 50 fee-paying independent schools broke competition law by “exchanging specific information regarding future pricing intentions on a regular and systematic basis”. A penalty of up to £10,000 was imposed on each participant school.

The letter was sent to the Independent Schools Council, the Headmasters’ and Headmistresses’ Conference, the Independent Schools’ Bursars Association and the Independent Schools Association UK. 

The CMA adds: “We are sure that you share our concerns not just about the unacceptability of anticompetitive practices in the current circumstances, but also the risk of undermining public trust more widely across the independent school sector. It is therefore vital that any poor behaviour is nipped in the bud now.”

They said in unprecedented times “the need for all sections of society to pull together for the good of all will be significant”.

“The services provided by independent schools are important to the lives of many children and their parents and guardians, and it is vital that trust can be maintained as we move through this time of crisis together,” they say.

ISC chief executive Julie Robinson said they were “grateful” for the CMA’s “timely reminder” which was inline with the advice they were giving.

She added: “We know of no evidence that schools are deliberately sharing information with each other and the CMA acknowledges that schools are striving to do the right thing. This matter has been resolved amicably with the CMA and of course we continue to brief schools on their responsibilities to comply with all relevant laws and regulations.”

A CMA spokesperson said: “We welcome the confirmation by the independent schools representative bodies to whom we have written that they are urging competition law compliance on their members.”