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INDEPENDENT SCHOOLS FACE HUGE FINES OVER CARTEL TO FIX FEESThe Times, 10/11/2005
By Tony Halpin, Education Editor FIFTY of the countrys top independent schools face fines running into millions of pounds after they were found guilty yesterday of operating a fee–fixing cartel.
The Office of Fair Trading (OFT) said that schools including Eton College, Winchester College, Westminster, Harrow and Rugby had broken competition law by colluding against parents to fix the level of their fees.
The OFT found that the schools had exchanged details of their planned fee increases over three academic years between 2001–02 and 2003–04, in breach of the Competition Act 1''8.
Bursars at the schools participated in an annual Sevenoaks survey, a round–robin message system co–ordinated by the bursar of Sevenoaks School, in which each provided information about their intended increases and the level of fees that they planned for the following academic year.
The OFT said: This regular and systematic exchange of confidential information as to intended fee increases was anti–competitive and resulted in parents being charged higher fees than would otherwise have been the case.
The regulators 500–page statement of objections comes more than two years after The Times disclosed details of a fee–fixing cartel involving dozens of independent schools.
E–mails and spreadsheets showed that schools routinely swapped sensitive cost and price information, in breach of competition rules, as they prepared their fee recommendations to governors. One e–mail containing details of fee increases at 20 other schools was sent to Sir Andrew Large, who is Deputy Governor of the Bank of England and Warden of Winchester College.
Sent by Bill Organ, Winchesters then bursar, it carried the message: Confidential please, so we arent accused of being a cartel. The Times also disclosed that Eton and Winchester had sought a plea bargain with the OFT to get immunity from fines in return for turning supergrass. The OFT offered a 50 per cent reduction in fines in return for co–operating with the inquiry.
Jack Rabinowicz, a leading education lawyer, said that parents of pupils at the schools would have a clear case for demanding a refund. He told The Times: One would hope that schools would be offering some sort of recompense or the OFT may be suggesting some sort of recompense for that.
The OFT did not impose any financial penalties yesterday, saying that the schools would be given until March to make representations about its report.
It has powers to fine enterprises in breach of the Competition Act up to 10 per cent of their annual turnover. However, the OFT said that at this stage it does not anticipate that any penalty imposed is likely to be at the top end of the range available.
The 50 schools charged a total of 660 million in fees last year. Even a fine of 5 per cent of turnover, half the maximum available to the OFT, would leave them facing a penalty of 33 million between them.
The Independent Schools Council (ISC) condemned the OFTs investigation as a scandalous waste of public money and argued that it amounted to an attack on the whole of the charitable sector. Jonathan Shephard, its general secretary, said: The OFT needs a result for the sake of its credibility.
The OFT has failed to understand that charities have no motive for raising more money than is needed for charitable activities.
Mr Shephard gave warning that any fines imposed by the OFT would diminish charitable assets or force charities to raise charges damaging the very people whom the OFT is supposed to protect.
He insisted that private schools had not known that they were subject to competition law. Schools had been exempt before to 2000 and the law had changed without any warning being given, he said.
The Charity Commission said that it would be studying the OFTs ruling carefully to examine its potential impact.
THE FIFTY SCHOOLS NAMED BY THE OFT AND THEIR FEES Ampleforth College (20,520) Bedford School (12,600) Benenden School (22,350) Bradfield College (21,750) Bromsgrove School (10,560) Bryanston School (21,800) Canford School (22,080) Charterhouse School (23,'55) Cheltenham College (21,450) Cheltenham Ladies College (21,72') Clifton College (20,670) Cranleigh School (22,350) Dauntseys School (11,370) Downe House School (22,875) Eastbourne College (13,170) Epsom College (22,38') Eton College (23,688) Greshams School (20,670) Haileybury School (20,'53) Harrow School (23,100) Kings School Canterbury (23,280) Lancing College (21,885) Malvern College (21,450) Marlborough College (21,'00) Millfield School (1',125) Mill Hill School (12,585) Oakham School (21,420) Oundle School (20,6'1) Radley College (21,360) Repton School (20,025) Royal Hospital School (16,'05) Rugby School (21,750) St Edwards School, Oxford (21,624) St Leonards–Mayfield School, Sussex (13,200) Sedbergh School (20,700) Sevenoaks School (20,1'') Sherborne School (21,675) Shrewsbury School (22,5'0) Stowe School (22,'80) Strathallan School (1',512) Tonbridge School (22,122) Truro School (8,427) Uppingham School (22,500) Wellington College (22,''5) Wells Cathedral School (11,175) Westminster Sch (15,204) Winchester College (23,500) Woldingham School (21,240) Worth School (21,165) Wycombe Abbey School (23,100)