UK competition watchdog probes school software contract revisions

Former Capita-owned ESS' minimum 3-year deals put under spotlight by CMA

Britain's competition watchdog is probing the largest local provider of school management information systems to ascertain if it is abusing its market dominance to force customers to sign three-year agreements.

Education Software Solutions told schools in November that it was ending the option of a one-year contract for MIS and was instead creating a minimum three-year deal for the previous SIMS Annual Entitlement Plan.

Some schools responded negatively and saw the revision as an attempt to lock them into longer-term deals. The Department for Education advised all schools to "pause" before signing new agreements as it investigated the revision but reportedly changed policy in December, telling them to buy as normal.

ESS told us in November that lengthier agreements are "standard practise" and that SIMS had been "very much the anomaly" in the sector. The new agreement, for schools that chose to select them, kicked off April 1.

The market share for ESS MIS was between 70 to 80 percent when it was sold by Capita to Montagu Private Equity in December 2020 for £400m. This was down from between 80 to 90 percent in 2017.

The investigation by the CMA, launched today, will assess if schools were given sufficient time to review their options, "such as moving to an alternative supplier instead of renewing with ESS for the full three years."

Most state schools in Britain are required to have MIS, used to manage student information including attendance and safeguarding. The selection process for choosing an MIS is "often lengthy and can involve complex procurement steps," said the CMA.

The CMA will consider the relevant issues, along with concerns raised by schools, and may impose interim measures on the ESS contracts as the investigation is conducted. Pricing of some ESS product packages will also feature, specifically whether the MIS was sold alongside financial management wares and if this deterred schools from moving to a new supplier.

"We have heard concerns regarding ESS's contract changes," said Ann Pope, senior director of antitrust at the CMA. "Thousands of schools rely on management information systems and their choice of supplier should not be restricted. The duration of the ESS contract has been significantly extended and schools should be able to pick the best provider for their needs."

ESS has introduced a six-month break clause in the contract but "some schools tell us this is still not enough time. A formal investigation will allow us time to consider this matter properly," Pope added.

A spokesperson at ESS sent us a statement:

"ESS believes it has acted properly at all times and has constructively addressed the CMA's concerns.

"We are confident that when the CMA completes its information gathering it will reach the same conclusions." It added, "ESS looks forward to engaging with the CMA as it conducts its investigation over the coming weeks." ®