The competitions and markets watchdog has launched a consultation on a proposal from a major school information management systems (SIMS) supplier to address concerns it has abused its dominant position to force a contract change on schools.
The Competition and Markets Authority consultation is seeking feedback from schools - and others likely to be affected - on a proposal from SIMS supplier Education Software Solutions (ESS), which would allow eligible customers to apply to an independent body to break their contracts with the firm.
In April, the CMA launched an official investigation into ESS’ decision to extend contracts from one to three years after a backlash and threats of legal action from hundreds of schools.
Documents published by CMA today reveal that ESS has proposed the measure to the watchdog aimed at addressing competition concerns.
The proposals include giving “schools the opportunity to apply to an independent adjudicator for a further 12-month break clause, if they had considered switching MIS supplier at the time of the move to ESS’ three-year contract but concluded that they would not be able to switch within the timescales set by ESS.”
The adjudicator would inform schools of the outcome of their application by 31 March 2023.
Under the proposals, schools would then have the option to “terminate” their new three-year contract with ESS a year before the end of the new three-year contract (on 31 March 2024).
CMA intends to ‘accept’ commitments
The CMA has today said “it proposes to accept” ESS’ proposals.
Formal acceptance by the CMA would mean the investigation would come to an end, “with no decision made as to whether or not the [Competition Act 1998] has been infringed by ESS”.
However, the watchdog has said that acceptance of the proposals “would not prevent the CMA from taking any action in relation to competition concerns which are not addressed by [them]”.
The closing date for the consultation is 5pm on 8 December 2022.
Earlier this year, the CMA announced it was investigating whether ESS gave its customers “sufficient time to consider their options” to switch to an alternative management information system (MIS) product after the SIMS supplier announced it was tripling the length of school contracts.
The watchdog said it was concerned that this change made it “more difficult for alternative providers to compete with ESS to win business”.
Last month, the CMA said it had made a decision on “administrative priorities grounds” to close the aspect of the investigation relating to ESS’ pricing of certain software packages.
Schools’ choice of supplier ‘should not be restricted’
Earlier this year, Ann Pope, senior director of antitrust at the CMA, said the watchdog had “heard concerns regarding ESS’ contract changes”.
Ms Pope said that “thousands of schools” rely on MIS and their choice of supplier “should not be restricted”.
While ESS had made some changes such as the introduction of a possible six-month break clause, which it gave schools the option to request by 20 February this year, Ms Pope said that some schools had told the watchdog this was “still not enough time”.
She added that a formal investigation “will allow us to consider this matter properly”.
In December last year, nearly 400 schools joined legal action over “legally questionable” contracts proposed by the supplier.
ESS had previously written to schools last November giving notice that it was ceasing to offer 12-month support contracts and would in future only contract for support on three-year terms. Schools had until the end of March to sign up or find an alternative.
And in January, it introduced a six-month break clause to its criticised contract extension.
The Department for Education had advised schools a year ago to “pause before signing” while it investigated the new terms but later gave the go-ahead in December.
Law firm Stone King previously said the contract renewal notice had put “great pressure” on schools, which was “legally questionable”.
ESS said that the change in terms from a one-year contract to a three-year contract was introduced to keep up with industry demands.
An ESS spokesperson said: “ESS welcomes today’s announcement from the CMA, in which the CMA proposes to consult on ESS’ proposal to allow certain schools to exit their three-year annual entitlement contracts at the end of the second year if they can demonstrate that they meet certain conditions.
“If ESS’ proposal is accepted, the CMA will close its investigation into ESS’ decision to replace one-year annual entitlement agreements with new three-year agreements. This, together with the CMA’s previous announcement of 27 October, would bring the CMA’s investigation to an end without any adverse finding being made.”
