| SPOTLIGHT |
The Competition and Markets Authority (CMA) has announced an investigation into whether ESS (Education Software Solutions Ltd) has broken the law by taking action to prevent schools from switching to a new management information system provider ahead of contract renewal dates.
The CMA said no conclusion should be made that the law had been broken.
Denying any abuse, ESS, 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, said it was “extremely surprised” by what it characterised as a “sudden announcement”.
Management information systems are databases used to handle student information, such as attendance and safeguarding, and most UK schools are required to have these databases in place.
The CMA said it had received complaints from schools and local authorities about ESS’ alleged behaviour.
The CMA said: “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 said it would 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, it said.
Juliette Enser, Interim Executive Director of Competition Enforcement at the CMA, 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 CMA said these binding commitments enabled eligible schools to exit early from their 3-year contract, adding that it continues to monitor ESS’s compliance with them.
“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,” it said.
The CMA has launched this investigation under section 25 of the Competition Act 1998.
In a statement ESS said: “We are extremely surprised at this sudden announcement by the CMA, which overlooks the fact that there are legitimate methods of migrating data from SIMS to the systems provided by our competitors. Guidance on these methods has long been available and we have made multiple communications to competitors, customers (and their support providers) explaining this.
“That some competitors have chosen to ignore these methods and have instead created a ‘workaround’ that accesses our core code, is the only abuse in this situation.
“It simply cannot be correct that the only way to sustain a competitive market is for one organisation to be forced to allow its competitors open access to its core intellectual property, which it has invested large amounts of time and money in developing.”
