Fee fixing scandal

Fee fixing scandal

In September 2005, fifty British Independent schools were found guilty of operating a fee-fixing cartel by the Office of Fair Trading. The OFT found that the schools had exchanged details of their planned fee increases over three academic years between 2001-02 and 2003-04, in breach of the 1998 Competition Act.

The Independent Schools Council (who were implicated) said that the investigation had been "a scandalous waste of public money".

Evidence

Emails showed that the schools were routinely swapping information about their costs and intended fee changes, as often as four to six times a year as part of a Sevenoaks' Survey. The investigation was prompted by the September 2003 leak of emails to The Times. Originally from Bill Organ, Winchester College's bursar at the time to the Warden of the College, they contained details of 20 schools' fees and the phrase:
Confidential please, so we aren’t accused of being a cartel.

Schools involved

In the case of Truro and Sedbergh, the OFT's preliminary conclusion is that they participated in the Sevenoaks Survey in only two of the three relevant years.

Arguments in support of the Schools

The Independent Schools Council felt that the action was disproportionate. It was argued that sharing information was common amongst charities (as the schools are classified) and that the aim was to keep fees as low as practicably possible. It should also be noted that until 2000, when the 1998 Competition Act displaced the 1976 Restrictive Trade Practices Act , the practice was legal as the schools were exempt from the anti-cartel laws that apply to businesses.

Resolution

The OFT released a 500-page statement which was summed up thus:
This regular and systematic exchange of confidential information as to intended fee increases was anti-competitive and resulted in parents being charged higher fees than would otherwise have been the case.
All the schools involved were given fines of only £10,000 each for their infringement (out of a possible 10% of total income) but together agreed to pay £3 million into a trust fund aimed to benefit the pupils attending the schools during the period involved ; it has been stressed that the trust fund is not a fine. The schools will pay equal instalments, finishing in 2010, totalling around £70,000 each. Eton and Winchester obtained 50% cuts in fines in return for co-operation in the investigation of other schools.

References

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