On 15 October 2015, the Competition and Markets Authority (“CMA“) wrote an open letter to UK Head teachers, governing boards and school uniform suppliers, warning them that they may be in breach of Competition Law if their school uniform supply arrangements are found to be anti-competitive in nature.
Chapter I of the Competition Act 1998 (“CA“) prohibits agreements which may affect trade within the UK and which have as their object or effect the prevention, restriction or distortion of competition within the UK (Section 2 CA). The concern lies with school policies which require parents to purchase uniforms from a specific supplier or from the school directly, and which have the effect of reducing market competition, creating local monopolies, reducing choice, and increasing prices.
This is not the first time that the issue of schools appointing exclusive uniform suppliers has been in the spotlight. In 2006, the Office of Fair Trading (“OFT“) urged school governors to permit parents to purchase uniforms from a choice of outlets after it reported that 80% of the 9,000 state schools in their study required uniforms to be purchased from a designated retailer or the school itself, and that the effect of this was a yearly price detriment of £32m to parents buying secondary school uniforms and £13m to parents buying primary school uniforms.
In 2011, the OFT reported that 74% of the state schools in their previous study continued to limit parents’ options through the use of restrictive supply agreements, and in 2012 the OFT again pressed schools to take action to introduce competition.
No enforcement action has been taken to date, and the CMA has now taken the reins. In its open letter of 15 October, the CMA has reminded UK schools and suppliers that restrictive uniform supply agreements may breach competition law and lead to investigations and fines, and advised them to review their uniform supply policies with this in mind.
The CMA has said that it will be monitoring the sector and taking enforcement action where necessary.