ESS facing Competition and Markets Authority probe

The Competition and Markets Authority (“CMA”) has received complaints regarding Education Software Solutions (“ESS”), England’s largest school management information system. It has been considering whether ESS has used its position in the market to prevent schools from switching providers with ease.

Schools reported to the CMA that ESS had informed them that they would be unable to share a copy of the school’s database with a new provider. ESS stated that the reasoning for this was potential breach of their intellectual property rights. Without the ability to share databases, which is a longstanding and widespread practice used in the sector, schools’ ability to move to a new provider may be severely hampered. In addition to this, ESS objected to alternative solutions put forward to enable the extraction by schools of their data.

The aim of the CMA investigation is to consider and determine whether ESS’ practices have constituted a breach of competition law. Whilst the investigation is carried out ESS may be subject to interim measures to prevent further potential harm.

ESS has previously been subject to scrutiny. In April 2022, the CMA investigated concerns that customers of ESS had to move from one-year contracts to three-year contracts, without having sufficient time to make alternative arrangements with other software providers.

The CMA was concerned that these changes reduced schools’ choice of MIS software provider and made it difficult for other providers to compete with ESS to win business. As a result, ESS made commitments that schools which had genuinely considered switching providers but reasonably concluded that they did not have sufficient time to do so could apply to an independent adjudicator for a 12-month break clause. If granted, the clause will allow them to exit their current three-year contract with ESS on 31 March 2024 and choose an alternative provider.

Whilst the CMA’s current investigation is entirely separate to the previous investigation, it highlights that schools should conduct due diligence before entering into commercial contracts with third parties. This should include researching the party to consider whether it has been, or is, subject to CMA scrutiny.