Education Software Solutions Limited breaks against the CMA’s intervention: A victory for freedom and flexibility in contracting for MIS services
Introduction – the Competition and Markets Authority (“CMA”) Investigation
A little under a year into the CMA’s intervention into the allegedly anti-competitive behaviour of Education Software Solutions Limited (“ESS”) — one of the UK’s leading providers of Management Information Systems (“MIS”) — a line has been drawn and the investigation has come to an end. The CMA launched its investigation into ESS on 26 April 2022, as it had reasonable grounds to suspect that ESS had potentially acted in violation of the Competition Act 1998 (the “Act”) through the manner in which it was supplying MIS software to schools in the UK.
The main crux of the CMA intervention was to review ESS’s moving of schools into 3-year contracts from initial contracts of 1-year, whilst giving the schools little opportunity to look for MIS services elsewhere. This involved an 8 month deep-dive analysis into the activities of ESS, with the CMA bolstering its investigation through information requests from ESS, its competitors and its customers. Crucially, it is a legal requirement for the vast majority of state schools across the UK to have an MIS in place, such as ESS’s SIMS service. As such, schools were on the backfoot, and essentially tied to 3-year MIS contracts with ESS, with very restricted abilities to move to another provider.
After months of investigation, the CMA issued, on 17 November 2022, a notice of intention to accept commitments offered by ESS. Ultimately, the CMA secured signed commitments with a new break clause from ESS on 10 January 2023, drawing a close to the CMA probe.
What does this mean for eligible schools?
Overall, this appears to be a favourable outcome for eligible schools who are looking for greater flexibility in their contracting for MIS services. The new break clause is only available to eligible schools, which were those schools moved into 3-year contracts with ESS, and who truly considered to move to a different provider had they had more time to deliberate other MIS avenues. Such eligible schools will benefit from a 12-month break clause, beginning from 1 April 2023, and enabling them to break their 3-year ESS contracts on 31 March 2024.
Eligible ESS customers must file an application form to an independent adjudicator in order to try and secure benefit from this new break clause ahead of the 5pm deadline on Friday 10 February 2023. Applicants will be notified of their success in securing a break clause on 31 March 2023.
Ann Pope, Senior Director of Antitrust at the CMA, stated that: “This break clause will give eligible schools 12 months to decide whether to exit their current contract and, if they do, to switch to a new provider — longer than ESS originally offered. The commitments secured from ESS will also bolster competition in the MIS market, giving schools more choice and ESS’s rivals a further chance to compete.”
What should you do?
Browne Jacobson is a leading national law firm with sector-specific industry leaders in the fields of commercial, education and disputes. As a full-service law firm, we are able to assist schools, colleges and trusts alike with any and all legal issues they may encounter, whilst scanning the horizon for their next challenges or opportunities.
In order to rake in the full benefit from the outcome of the CMA’s investigation before the 10 February 2023 deadline, eligible schools should reach out to our sector-specific experts at Browne Jacobson today.
Contact
Conor Macaire Duncan
Trainee Solicitor
conor.macaireduncan@brownejacobson.com
+44 (0)330 0452254
Amba Griffin-Booth
Senior Associate
Amba.Griffin-Booth@brownejacobson.com
+44 (0)330 045 2489
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