The Competition Commission Tackles Schools Over Uniforms

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On Tuesday, the Competition Commission finally announced that it had ‘gone after’ several schools and suppliers over various anti-competitive practices in the sale of uniforms. However, the commissioner was at pains to point out that the process is not supposed to be punitive, but should rather encourage the sector to comply with the Competition Act. It’s been years of complaints from the parents of schoolchildren. Was this action enough to curb what is clearly a rampant problem?

Since January 2017, the Competition Commission has been investigating certain business practices amongst schools which contravene the Competition Act, mostly which seem to be the appointment by schools of exclusive suppliers, and unreasonably high prices on items. The culmination – in part – of this investigation was the extraordinary scene on Tuesday of three representatives from the sector reading out at a press conference a written commitment that the sector would cease violating the act.

The people representing the Federation of Governing Bodies of South African Schools (Fedsas), The Independent Schools Association of Southern Africa (Isasa) read out the pledge, promising that uniforms would be made as generic as possible, schools wouldn’t only have one supplier, and those contracts won’t be allowed to stand in perpetuity.

At the press conference, the commissioner Tembinkosi Bonakele said that there has been an ‘education process’ since 2010 to try and curb the rampant competition law violation amongst schools and suppliers, and some parents have filed complaints in 2019. Ironically for schools, many of the people engaging in this behaviour were reportedly unaware that what they were doing was unlawful. In November 2018,  the commission with Fedsas ‘urged’ non-complying organisations to reach out in order to settle its cases and help change its practices. At the same time as ‘asking nicely’, the commission sent several suspected cases of non-compliance to the Competition Tribunal, where the settlement was reached.

Remarkably, the tribunal said that none of the organisations implicated in the matter had admitted to violating the Competition Act, and the commission had not sought for financial or other punishments for these organisations.

Bonakele explained at the press conference, saying that the commission preferred cooperation to cooption. “We want things to work well,” he said. “Nobody wants to criminalise schools.”

He urged parents to examine the contracts that their schools sign with suppliers. He said: “Ultimately, you pay for these contracts. So we want vigilant parents.”

Why business cartels thrive in South Africa

The investigation is still ongoing, and another is looking at school suppliers, specifically to find cartel behaviour.

Given South Africa’s serious problem with anti-competitive behaviour and outright cartels, the leniency with which the tribunal and commission dealt with the ‘school uniform cartel’ is astonishing. By the commissioner’s own admission, the sector has a serious anti-competitive behaviour problem that they have known about since 2010, and in spite of an extensive education problem, people are still complaining.

It’s not just a school uniform problem. The commission and tribunal have over the years busted cartels across industries: in the manufacture of margarine, bread, construction materials, and even bicycles.

The commissioner’s emphasis on diplomacy and advocacy over punishment may be misplaced. There are thousands of schools out there, and the commission has scant resources with which to pursue these people properly. A strong message about non-compliance in the form of a stiff fine would not have been out of place.

The ‘naughty children in detention class’ routine that Bonakele made the Fedsas and Isasa do in front of the media may have been amusing, but it arguably was a slap on the wrist for people who have been ripping off the parents of schoolchildren for decades now. Surely it is not enough.

 

Featured image via Flicker

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