Competition Authority Tackles School Uniforms
The Competition Authority has warned schools about operating exclusivity deals with retailers.
At the start of each school year, the Competition Authority receives complaints from parents relating to school uniforms. The most common complaint is about schools granting exclusivity in supply of uniforms to one retailer, therefore depriving parents of choice in respect of where to buy uniforms.
Parents are frustrated that they cannot shop around and feel that they may be charged excessively high prices by the exclusive retailer.
In May 2014 the Competition Authority received a complaint from a retailer who wished to sell a school uniform for a school which had previously had one exclusive retailer.
The complainant, a retailer of school uniforms, approached a local school and pointed out that the schools policy of appointing a single approved retailer of school uniforms was at variance with the Competition Authority guidance.
Following this representation the school agreed to appoint the complainant as a second approved retailer of its uniforms.
The complainant then placed an order for the school's uniform with a manufacturer. The manufacturer was initially willing to supply the complainant. However following representations from the first approved retailer, the manufacturer refused to supply the second retailer.
After a preliminary analysis of the school uniform market the Competition Authority was satisfied that this complaint raised competition law concerns.
Requests for information were issued to the parties concerned and following replies to these requests for information, it was apparent that there were no impediments preventing the manufacturer from supplying the complainant.
Following the Authority's intervention, the manufacturer (i) agreed to supply the complainant with the school uniform in question, and (ii) agreed to expedite orders made in relation to the school in question.
In a statement, the TCA said: “It is clear from our investigation that some schools still have a policy of appointing one exclusive retailer to sell uniforms. Competition between retailers tends to result in lower prices and better quality. We would encourage schools, where possible, to allow a number of different retailers to supply their uniform.
“If a school chooses to appoint a single retailer, we recommend they choose that retailer through a competitive tender, and not on the basis of established or historic relationships.
While exclusive supply arrangements by their nature, involve some restriction of competition, they do not necessarily involve a breach of competition law. However, the onus is generally on the parties to such arrangements to show that they do, in fact, benefit consumers.
The TCA notes that where a school appoints an exclusive uniform supplier, the risk of the supplier exploiting its effective monopoly may be limited by a number of factors, including:
+ the school's duty and ability to determine the quality and (in some cases) the price of the uniform, and
+ parents' ability to complain to the school's principal or board of management who have the influence to change uniform policy.
If a school chooses to establish an exclusive supply arrangement with a retailer, the Authority recommends that the retailer is chosen by means of a competitive tender and not chosen on the basis of established or historic relationships.
The selection criteria should cover, among other things, quality, price, level of service, etc. This enables competition to occur at the tender stage and enables schools to agree the exclusive arrangement with the retailer or retailers who offer the best mix of quality, price and other selection criteria.
According to the TCA, the arrangement should be reviewed on a regular basis and is not awarded for an excessively long duration. (August 2014)