17 school systems face CCP action for forcing parents to buy overpriced branded supplies
ISLAMABAD:
The Competition Commission of Pakistan (CCP) has served show-cause notices on 17 leading private school systems for allegedly treating 26 million students as “captive consumers” under a tie-in arrangement by forcing them to buy up to 280% more expensive logo-bearing stationery and uniforms.
The 17 schools are found to be engaged in tie-in practices by way of mandatory use of logo-bearing notebooks, workbooks and school uniform, according to an inquiry report released by the CCP on Friday.
The CCP issued the show-cause notices to schools for allegedly abusing their dominant position by forcing parents to purchase expensive, logo-branded notebooks, workbooks and uniforms exclusively from school-authorised vendors, said a statement issued by the commission. The action has been taken to safeguard millions of school-going children and their families from unfair pricing practices, it added.
The report revealed that these schools, having a total of 25.5 million enrollments that comprise 47% of total students in Pakistan, were selling stationery at prices higher by 53% to 280% than market prices.
“The school systems under scrutiny include Beaconhouse School, the City School, Headstart, Lahore Grammar School, Froebel’s, Roots International, Roots Millennium, KIPS, Allied Schools, SuperNova, Dar-e-Arqam, STEP School, Westminster International, United Charter School and The Smart School, among others,” it said.
These school networks operate hundreds of campuses nationwide and educate millions of students, giving them considerable influence over enrolled families, said the antitrust watchdog. The buyer is forced to purchase the tied product.
The inquiry report stated that the schools have adopted the practice of printing their logo-bearing school supplies and appointed vendors and distributors. The exclusive vendors and distributors indicate that each school has been engaged in the production, distribution and supply of tied products in the relevant market.
“Each school has designed its policies in a way that students are compelled to use the tied products,” said the inquiry.
The CCP said that “there were eight school systems where the difference in quoted prices and prices of notebooks offered by these schools was more than 50%, which increased to 280% in case of some schools”.
It compared retail prices with general, off-the-shelf notebooks to analyse the additional cost and margins in the supply chain. The analysis revealed price differences ranging from over 50% to 150%.
The inquiry revealed that parents were mandated to buy logo-bearing notebooks, workbooks, uniforms and other ancillary products from school-authorised outlets. In several instances, schools sold compulsory “study packs” through online portals or designated vendors, with students prohibited from using generic notebooks or uniforms from the open market.
The report concluded that leading school systems were engaged in tying arrangements, making continued enrollment conditional upon purchasing secondary products such as notebooks and uniforms. Schools appointed exclusive vendors, foreclosing the market for thousands of small stationery and uniform sellers nationwide.
High switching costs, such as limited school options, substantial transfer fees and transportation constraints left parents with no viable alternative, enabling schools to enforce these practices without resistance. The CCP observed that these practices restricted market access, harmed small retailers and limited consumer choice.
The CCP has directed the 17 school systems to submit written responses to show-cause notices within 14 days, appear before the commission through duly authorised representatives and explain why penalties should not be imposed.
The CCP said that under the law, it can impose a penalty of up to 10% of the annual turnover or Rs750 million, whichever is higher, for such violations.
Commenting on the overall education-sector status, the report underlined that between 2022-23 and 2023-24, student enrolment increased from 56 million to 58.3 million. However, in contrast to this upward trend, the total number of educational institutions declined from 349,909 to 342,547, marking a 2.1% reduction, primarily due to a decrease in private institutions.
An estimated 25.1 million children between the ages of 5 and 16 are currently not attending school nationwide.
At the provincial level, Punjab has the highest number of out-of-school children at 9.7 million, or 27% of the total provincial 5-16-year-old population, followed by Sindh with 7.4 million, or 44% of the total provincial 5-16 population. Khyber-Pakhtunkhwa has 4.5 million out-of-school children, or 34% of the provincial 5-16 population and Balochistan has 3.5 million children out of school, or 69% of the total.
The report stated that as of 2023-24, private schools served 46.5% of Pakistan’s 55 million students, with a significant presence in both urban and rural areas.
