Education software firm probed over potential abuse of dominance
The CMA is investigating whether ESS has broken the law by taking action to prevent schools from switching to a new management information system provider.
- CMA suspects ESS may have been trying to retain customers by making it difficult for them to switch providers ahead of contract renewal dates
- CMA received complaints from schools and local authorities about ESS’ alleged behaviour – and is aware of widespread concerns in the education sector
- CMA: “We’re concerned about the complaints we’ve received regarding ESS’s alleged behaviour”
Management information systems are important databases used to handle student information, such as attendance and safeguarding, and most UK schools are required to have these databases in place. Education Software Solutions Ltd (ESS) is the largest provider of these systems in the UK, with approximately a 50% share of the market in England, and even higher in Wales and Northern Ireland.
The Competition and Markets Authority (CMA) has received complaints from a number of ESS’s customers suggesting the firm is making it difficult for them to switch to a new provider.
These schools reported they had been warned by ESS that they would not be able to share a copy of their database with a new provider, as doing so would breach ESS’s intellectual property rights. The CMA understands that sharing database back-up copies is a longstanding and widespread practice used in the sector for data transfer of this kind and, without it, the CMA is concerned that schools’ ability to move to a new provider would be severely hampered.
While some means of switching are permitted by the company, they are reportedly complex, time consuming and error prone. Moreover, schools and competitors reported that ESS had objected to the alternative solutions put forward to enable the extraction of their data.
The CMA will be investigating ESS to determine whether or not the law has been breached. As part of this, the CMA will consider whether it needs to impose interim measures to prevent harm from occurring while it carries out its investigation. If the allegations against ESS are found to be true, such behaviour could be a breach competition law.
Juliette Enser, Interim Executive Director of Competition Enforcement, said:
We’re concerned about the complaints we’ve received regarding ESS’s alleged behaviour. As such, we’ll be investigating their conduct with urgency to get to the bottom of the matter.
Management information systems are an integral part of protecting schools’ data, reducing costs, and safeguarding students. It’s essential that schools are able to pick the most appropriate system for their needs – and change providers with ease when their contract is up.
In 2022, ESS offered the CMA commitments following a review to determine whether the company was using its dominant position in the market to push schools into accepting new 3-year contracts, where previously they had run for just one year. The binding commitments enabled eligible schools to exit early from their 3-year contract, and the CMA continues to monitor ESS’s compliance with these commitments. The CMA’s new concerns in relation to ESS’s conduct focus on a different possible abuse of dominance and are therefore the subject of a separate investigation.
For more information, see the CMA’s investigation into conduct of Education Software Solutions Limited (51427) case page.
Notes to editor
- No conclusion should be made that the law has been broken.
- ESS is the largest provider of school management information systems in the UK. Its systems are currently used in England, Wales, and Northern Ireland.
- The CMA launched this investigation under section 25 of the Competition Act 1998 following reasonable grounds to suspect there had been an infringement of competition law. If the CMA decides that there has been a breach of competition law, it can impose a fine up to 10% of ESS’s worldwide turnover, as well as issue legally binding directions to bring the breach to an end.
- Interim measures are a set of actions that can be put in place where the CMA suspects anti-competitive behaviour is taking place and has an open investigation into this. They are put in place as a matter of urgency to prevent significant damage to a particular person or category of person, or to protect the public interest in accordance with section 35 of the Competition Act 1998. For more information, see Guidance on the CMA’s investigation procedures in Competition Act 1998 cases: CMA8, section 8.
- The competition legislation relevant to the CMA’s investigation is the Competition Act 1998. The Chapter II prohibition in the Competition Act 1998 prohibits any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market, and which may affect trade within the UK.
- All enquiries from journalists should be directed to the CMA press office by email on [email protected] or by phone on 020 3738 6460.
- All enquiries from the general public should be directed to the CMA’s General Enquiries team on [email protected] or 020 3738 6000.