Parents and students are gearing up for the new school year. This is an expensive exercise – especially for those in need of first-time or new school uniforms. However, the Competition Commission – through its investigation into the pricing of school uniforms and subsequent stakeholder engagements – are hopefully bringing some much-needed relief for parents.
In January 2017, the Competition Commission of South Africa (Commission) launched an investigation into allegations of anti-competitive behaviour in the supply of school uniforms. The investigation was prompted by complaints from parents and school uniform suppliers. Parents felt that school uniform suppliers charged excessive prices. They were able to do so as they essentially had a captured market. Smaller suppliers felt that they were being excluded from competing in the school uniform market as a result of long-term exclusive supply agreements between schools and selected suppliers. The problem, as the Commission later unearthed, was pervasive.
In terms of the Commission's findings, long-term exclusive supply agreements enabled school uniform suppliers to charge customers higher prices. This also prevented other potential suppliers from entering the market and competing for customers. A consequence of such agreements meant that customers were limited to only sourcing school uniforms from one supplier, leaving them exposed to suppliers potentially charging monopoly prices.
In an attempt to cure the harm caused by the exclusive supply agreements, the Commission signed a memorandum of understanding (MoU) with the Governing Body Foundation, the National Association of School Governing Bodies, the Federation of Governing Bodies of South African Schools and the South African National Association of Specialised Education. The MoU was concluded to educate and raise awareness on anti-competitive procurement practices and to ensure that schools comply with the school uniform guidelines published by the Department of Basic Education. The Commission has subsequently also concluded consent agreements directly with various schools.
The Commission further created guidelines for pro-competitive school procurement which include the following:
- School uniforms should be as generic as possible such that it is obtainable from more than one supplier;
- Exclusivity should be limited to items that the schools regard as necessary to obtain from pre-selected suppliers, for example, badges and ties.
- Schools should follow a competitive bidding process when appointing suppliers for school uniforms and learning-related items;
- Supplier agreements should be of limited duration and not for excessively long periods. At the end of the contract a new competitive bidding process must be pursued; and
- Schools must not compel parents to purchase new/additional school uniform items for clothes rotation during the Covid-19 pandemic. Instead, schools should consider alternative interventions including permitting the wearing of civilian clothing by pupils on some days.
At a more practical level, the Commission has also published a guide for schools, parents and school governing bodies on the procurement of school uniform and learning material, which can be accessed here. The guide is a helpful tool and provides guidance on what all stakeholders can do to change historic anti-competitive practices in school uniform supply.
An increase in competition and pro-competitive procurement practices will hopefully aid in reducing the costs of school uniforms.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.