Capita 'sheltering behind' competition law, says expert

24th June 2011 at 01:00
IT provider's relicensing fees for academies 'might be an abuse' of market position

Private services company Capita could be "sheltering behind" competition law as an "excuse" to charge high fees when a school converts to an academy, according to a leading lawyer on the subject.

Capita has been demanding payments from schools which opt to transfer to academy status just to relicense their existing back-office computer systems.

The decision has led to serious concern among some headteachers who have been slapped with bills of up to #163;25,000 to change the licence on their management information systems (MIS).

The systems are critical to the running of a school as they control all parts of their administration, including registration, dinner money and admissions.

Capita's own system, Sims, is used by some 20,000 schools. The company has said it must pass the cost of relicensing on to the school so as not to be "seen as using its position unfairly against its competitors".

But Edward Pitt, a solicitor with London-based firm Bates, Wells and Braithwaite, said Capita might be seen as "exploiting" its dominant position in the MIS marketplace to charge schools thousands of pounds just to change their licence when they become an academy.

Mr Pitt, an expert on UK and EU competition law, told The TES: "This sounds to me like Capita seeking to shelter behind competition law as an excuse to charge a high fee.

"A dominant supplier (such as Capita, with an 80 per cent plus share in the market for MIS used in schools) must not abuse its dominant position."

He added: "The charge of a fresh licence fee to an academy which in practice is stepping into the shoes of a predecessor school might be seen to be an exploitative abuse."

As a result of its actions, Capita could be in line to make millions of pounds from the expansion of the academies programme as more schools take up the Government's offer to convert.

Greenshaw High School in Sutton is one school that decided to convert this year and was forced to pay around #163;25,000 to relicense its existing Sims, a move that headteacher William Smith has described as a "rip-off".

"The software we are using now we are an academy is identical to what we were using before. There were no structural changes that I was aware of - it's just a transfer of licence," he said.

"I still find the whole thing outrageous, and I'll be very interested to know what the Department for Education is going to do about it. They said no school converting to academy status would be financially advantaged or disadvantaged compared to mainstream schools. This is clearly a disadvantage."

Capita denied outright the claims that it might be exploiting its position in the market and sheltering behind competition law to charge high fees. Phil Neal, managing director of Capita's Sims, said: "The allegations made against Capita are without merit. As a company, we have invested significant sums to provide academies with high-quality products and services and we believe that our prices are reasonable, competitive and offer good value for money."

Insight, pages 26-27.

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