The competition watchdog is investigating whether England’s largest school information management system (SIMS) supplier is “abusing a dominant position” to push new three-year contracts onto schools.
ESS announced last autumn that it was scrapping its normal one-year rolling contracts in favour of three-year deals from this April, prompting a backlash in schools who felt they had little time to find new deals.
The company is owned by Parent Pay, having been sold for £400 million by Capita in 2020. It has a market share of around 70 per cent.
The Department for Education initially told schools to hold off on signing the new deals while it looked into the change. The government eventually gave schools the green light, but hundreds signed up to take collective legal action.
Fears change makes it harder for competitors
The CMA said it was considering “whether schools were given sufficient time to consider their options, such as moving to an alternative provider instead of renewing with ESS for the full three years”.
The watchdog is “concerned” the change “makes it more difficult for alternative providers to compete with ESS to win business”.
Schools use information management systems to process pupil data, including on attendance and safeguarding.
The CMA said it had been told by some schools that the process for selecting a provider is “often lengthy and can involve complex procurement steps”.
The watchdog will consider “all relevant issues, including the concerns raised by schools and whether it should be imposing interim measures while its investigation is ongoing”.
Ann Pope, senior director of antitrust at the CMA, said: “Thousands of schools rely on management information systems and their choice of supplier should not be restricted.
“The duration of the ESS contract has been significantly extended and schools should be able to pick the best provider for their needs.”
Schools lack time to pick best SIMS provider
She said that while ESS had made “some changes” such as a six-month break clause, “some schools tell us this is still not enough time”.
“A formal investigation will allow us to consider this matter properly.”
The watchdog said its investigation would also consider the pricing of some ESS packages – and specifically look at how its SIMS product is sold alongside financial management software.
This could “encourage customers to buy both products and deter customers moving away from ESS”, the CMA warned.
“The CMA is concerned that, by adopting such a pricing strategy, market players that only offer one of these services may be unable to compete, potentially leading to an uncompetitive market in future.”
However, the watchdog added that it had “not reached a view as to whether there is sufficient evidence of an infringement of competition law for it to issue a statement of objections to any of the parties under investigation”.
Not all cases result in the CMA issuing a statement of objections, they added. The CMA will conduct its initial investigation between now and August.
An ESS spokesperson said the company “believes it has acted properly at all times and has constructively addressed the CMA’s concerns”.
“We are confident that when the CMA completes its information gathering it will reach the same conclusion.
“ESS looks forward to engaging with the CMA as it conducts its investigation over the coming weeks.”