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JEREMY MAGGS: Well, back from the holidays, school’s starting, and you have to fork out for new school uniforms. But is there some skullduggery afoot? The Competition Commission has expressed concern over possible violations of the Competition Act. The body has received more than 200 school uniform related complaints to probe over the past year.
Joining us now is Karabo Motaung, who’s principal analyst of advocacy at the Competition Commission. Karabo, a very warm welcome to you. First up, what type of violations of the act are schools and uniform suppliers potentially committing?
KARABO MOTAUNG: Thank you very much and good afternoon to your listeners. So exclusive contracts essentially would be an agreement between the school and the supplier, and to the extent that it forecloses other participants from entering the market. It would be what we call a vertical restrictive practice, so a practice that contravenes Section 5 of the Competition Act.
JEREMY MAGGS: How widespread do you think this is?
KARABO MOTAUNG: It’s extremely widespread, Jeremy, because you can just imagine the number of schools that we have in this country. We have tried through our advocacy to reach as many schools as possible, but we are still not even as the commission reaching even those schools, even in the deepest rural communities. So it is quite a widespread conduct.
Read: Are school uniform prices coming down? [Jan 2017]
I think it is important that people do understand that in as much as we are trying our best, there are thousands and thousands of schools based on the data that we’ve just received from the Department of Basic Education (DBE).
JEREMY MAGGS: It’s not a new problem, but is there an increase do you think?
KARABO MOTAUNG: There’s an increase in terms of awareness. I don’t think the problem, like you said, the problem is definitely not new. It’s not that the conduct has increased, it’s just that maybe parents are becoming more aware of the problem. They’re becoming aware of the fact that the Competition Commission is calling on them to come and lodge complaints, and perhaps that is why we are seeing complaints still coming through. However, the conduct itself, I do not necessarily think that it is increasing.
Read: CompCom continues with school uniform investigation [Jan 2018]
JEREMY MAGGS: So you have these exclusive agreements or arrangements that you’ve referred to with the uniform suppliers. Obviously, Karabo, there is going to be an impact on price. Do we have any indication of how it’s affecting the end user? In other words, the moms and dads?
KARABO MOTAUNG: Jeremy, we see from the complaints, we have not done an economic analysis on the impact of school uniforms and these exclusive agreements between schools and suppliers.
But just judging from the complaints, parents are really desperate and are really crying out for help.
You can imagine, Jeremy, of course, post-Covid, families are cash-strapped, and school uniforms being something that is important and something that is an essential need for learners, we can just expect and anticipate that it has a major financial blow on many families across the country.
JEREMY MAGGS: You’ve alluded to capacity issues as far as the commission is concerned, but having said that though, what methods are you employing to probe the complaints that you’ve received so far, and what success, if any, have you achieved?
KARABO MOTAUNG: So we take complaints on a case-by-case basis. So we receive a complaint, we engage with the complainant, get whatever information that we need. We then go and engage with the school directly, and in most cases, sometimes you hear the school saying they were not aware of the guidelines; they were not aware that this is a contravention.
In some instances, schools will tell you this is an agreement, the principal will tell you this is an agreement that they found in place, it’s been there for many years.
However, we have had some successes, Jeremy, because our aim really, as we have indicated initially, is really not to prosecute schools, but really to change behaviour and ensure that we improve the state of competition in this market.
So some of our interventions with the schools really have been to assist them in terms of one, removing the exclusivity clauses in these contracts. Two, ensuring that they have a system in place which allows them to at least appoint more than one supplier, but also to ensure that the contracts that are in place currently have a termination date, that they’re not evergreen contracts, and that they understand that going forward, new contracts that they conclude should not be longer than a period of five years.
After every five years, the school should, through a competitive tender process, issue out a tender and invite those suppliers that are interested in supplying the school to come and tender and show what it is that they can provide to the school.
JEREMY MAGGS: I suppose you can’t exclude the possibility of bribes and backhanders.
KARABO MOTAUNG: You can’t, Jeremy, and once you get into that world, it becomes something else.
JEREMY MAGGS: What options or recourse do parents have then if they have bought a uniform where they suspect that there is price collusion?
KARABO MOTAUNG: Jeremy, parents can still lodge complaints with the Competition Commission. The commission will go and investigate that specific school and try and understand what the situation is. So parents are still welcome to lodge complaints to the Competition Commission.
JEREMY MAGGS: Are you looking at revising your guidelines in terms of school uniform supply?
Read: School uniform policy revisited [Feb 2018]
KARABO MOTAUNG: Jeremy, I think the guidelines as they are, do not necessarily warrant a revision. The reason the commission has not prosecuted schools in the past is because we were very clear that prosecution takes time. Remember, a few years ago, we did prosecute school groups, we prosecuted Curro, ADvTECH, Inspired schools and St. Andrew’s, and some of those bigger school groups and suppliers. So we have been able to successfully prosecute schools in the past.
But following that prosecution, we decided that because we did conduct a survey back then that schools were not aware of their conduct and so that’s why we then chose the advocacy route and, hence, the guidelines came into place. But I think where we are as the commission right now, Jeremy, is we are saying that we have done our best. We’ve done advocacy. We’ve gone out and educated schools.
We’ve gone out and done a lot of awareness around these issues. However, right now we will be prosecuting schools, Jeremy, that still continue to contravene the Competition Act.
JEREMY MAGGS: Thank you very much for joining us, Karabo Motaung, principal analyst of advocacy at the Competition Commission.
