The Competition and Markets Authority has warned British private schools to avoid colluding on plans for fee reductions and discounts as they struggle to adjust to the impact of coronavirus.
In a letter sent by the regulator earlier this month to independent schools organisations, which has been seen by the Financial Times, Howard Cartlidge, senior director, cartels, said: “We have become aware that individuals at some schools may be engaging in discussions with each other about the level of discounts and/or refunds on school fees.”
Mr Cartlidge declined to give any specific examples but cautioned that the CMA would “not tolerate” the sharing of information on sensitive decisions “which should be taken independently”, and warned that organisations could incur fines of up to 10 per cent of turnover, as well as “the risk of undermining public trust more widely across the independent school sector”.
The alert comes at a time of growing pressure by parents for private schools to cut fees after the coronavirus lockdown, which saw them switch largely to online provision. Some institutions are under significant financial pressures because of both the pandemic and a recent rise in pension contributions.
In 2006 a £10,000 fine was levied on each of 50 schools judged by the Office of Fair Trading, the predecessor body to the CMA, to have regularly and systematically exchanged information on future pricing intentions.
Barnaby Lenon, chair of the Independent Schools Council, which represents more than 1,300 private schools, said the letter was “a helpful warning”. “Schools are not allowed to collude on future fees and as far as I know have not been doing so,” he said.
While the regulator has tolerated “temporary co-ordination” by businesses because of coronavirus when judged to be in the public interest, to avoid shortages or to help consumers, Mr Cartledge said that discussions on fees and “commercially sensitive information on future pricing or business strategies . . . would almost certainly infringe competition law.”
Groups of parents and specialist educational publications have been collecting and sharing information on discounts to apply pressure on institutions, and Mr Cartlidge wrote: “We have become aware that individuals at some schools may be engaging in discussions with each other about the level of discounts and/or refunds on school fees.”
Some schools have announced rebates of up to 30 per cent in recent weeks and boarding schools have waived the additional costs for residential students, while others have promised rebates once they have tallied any net savings over the summer.
Robert Verkaik, co-founder of Private School Policy Reform, the think-tank that shared the letter, said: “Those parents who have spent tens of thousands of pounds to send their children to an independent school will be rightly very angry if some of the schools are working against their interests by setting uncompetitive fees. Many private schools today are really multimillion-pound corporations masquerading as charities.”