Schools lose fee case

11th November 2005 at 00:00
Fifty of Britain's most prestigious private schools broke competition law by sharing information about fee increases, the Office of Fair Trading has ruled.

The schools - which include Eton, Harrow and Winchester - now have until March to make written and oral statements explaining their actions before the watchdog decides whether they should face fines of millions of pounds.

The OFT issued the provisional statement of objections to the schools this week after a two-year investigation which it said was one of the largest in its history.

It found evidence that the schools had shared information about fee levels and fee increases for their boarder and day pupils between 2001 and 2004.

The information was exchanged through a survey, co-ordinated by the bursar of Sevenoaks school, which was updated and circulated between the schools up to six times a year.

"This regular and systematic exchange of confidential information as to intended fee increases was anti-competitive and resulted in parents being charged higher fees than would otherwise be the case," the OFT said.

The OFT can charge maximum fines of 10 per cent of a company's annual turnover in cases such as this where the Competition Act of 1998 has been breached.

For a school such as Eton, which charges annual fees of more than Pounds 23,000, the fine could reach nearly pound;3 million.

However, the OFT said that it "did not anticipate that any penalty imposed was likely to be at the top end of the range available".

The Independent Schools Council criticised the watchdog's investigation, which is believed to have cost more than pound;200,000, saying it had been a scandalous waste of money. Jonathan Shephard, general secretary of the ISC, said that fee-paying schools had been placed in a "Kafkaesque situation".

Private schools had been excluded from the Restricted Trade Practices Act 1976, but that exclusion was removed without any debate in Parliament by the Competition Act 1998.

"Schools are now being held liable for breaking a law which no one knew applied to them," he said. "The moment that schools realised that the law had changed, they immediately stopped ex-changing information.

"The OFT has failed to understand that charities have no motive for raising more money than is needed for charitable activities."

Parents' reactions to the OFT ruling were mixed. A father whose sons attended Winchester and Marlborough said he was pleased that the schools had been caught out as he felt their fees had been outrageous.

But an accountant, whose three children have attended two of the other listed schools, said that he felt that fee increases over the past five years had been broadly justified.

"If the increases had not been in line with factors like inflation I would have taken it up with the school myself," he said.

"My worry is that the fines will push up the fees paid by parents - who the OFT were supposed to protect - and could cause some of the smaller schools to close."

* michael.shaw@tes.co.uk

The 50 who broke the rules

Ampleforth

Bedford

Benenden

Bradfield

Bromsgrove

Bryanston

Canford

Charterhouse

Cheltenham college Cheltenham ladies' college

Clifton college

Cranleigh

Dauntsey's

Downe House

Eastbourne

Epsom

Eton

Gresham's

Haileybury

Harrow

King's school, Canterbury

Lancing

Malvern

Marlborough

Millfield

Mill Hill

Oakham

Oundle

Radley

Repton

Royal Hospital school

Rugby

St Edward's, Oxford

St Leonards-Mayfield

Sedbergh

Sevenoaks

Sherborne

Shrewsbury

Stowe

Strathallan

Tonbridge

Truro

Uppingham

Wellington

Wells Cathedral school

Westminster

Winchester

Woldingham

Worth

Wycombe Abbey

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