Competition Tribunal agreement to increase competition and ensure cheaper prices in the school uniform market
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SCHOOL uniform customers could find reprieve as the Competition Tribunal has confirmed, as an order, a consent agreement whereby a school uniform supplier/retailer agreed to no longer enter into exclusive supply agreements with schools and school groups, and to change existing supply agreements to this end.
The tribunal said in a statement issued yesterday that the consent agreement between McCullagh and Bothwell (Hyde Park); McCullagh and Bothwell; and DRRW Investments (collectively, “McCullagh and Bothwell”) and the Competition Commission formed part of greater efforts to increase competition, reduce barriers to entry and ensure cheaper prices in the school uniforms market.
In accordance with the consent agreement, McCullagh and Bothwell would have to, among other things, ensure that any new supply agreements with schools did not contain a clause whereby they were appointed as the sole stockists of school uniform items.
Existing supply agreements must also be amended to have a termination date of no later than five years after the date of signature of the amended agreement. In addition, new supply agreements must be limited to a period of no more than five years and McCullagh and Bothwell could not enter into any evergreen agreements.
Before 2015, the commission received numerous complaints relating to the high cost of school uniform items and exclusive agreements that prevented suppliers from entering the market. The commission undertook various advocacy initiatives to address these concerns.
In 2017, the commission launched an investigation into several schools and school uniform manufacturers and suppliers for possible contraventions of the Competition Act, following numerous complaints received from parents and school uniform suppliers.
The commission’s investigation found that exclusive supply agreements of a long duration enabled school uniform suppliers to charge customers higher prices and prevent other potential suppliers from entering the market and competing for customers.
BUSINESS REPORT ONLINE