Competition law | Academy trusts

Does competition law apply to academy trusts?

This article was first published in Schools Week on 13 November 2017

As multi-academy trusts come to dominate in so many areas, concerns are raised about unfair competition and less choice for parents. But the mechanism for challenging a MAT’s dominance is not at all clear, as education law expert Russell Holland explains.

The Competition and Markets Authority (CMA) was established in 2014 to combine the functions of the former Competition Commission and Office of Fair Trading. It is most likely to feature in the news for its work in commercial areas, and you might recently have seen its work on the proposed merger of Fox and Sky News.

At first sight it may not seem to have much to do with education. However, back in 2015, the CMA did write an official letter to schools about school uniforms. It pointed out that some schools’ uniforms policy, in which parents could see bills of hundreds of pounds, could be in breach of competition law, and reminded leaders and their suppliers of its power to issue fines or make directions about anti-competitive behaviour.

Legally speaking, multi-academy trusts (MATs) have an unusual status. They combine aspects both of private and public organisations and pose interesting legal issues. An MAT is a private company and must comply with company law, but they are also an exempt charity, so charity law also affects them.

They have a master funding agreement with the education secretary, but also individual supplemental funding agreements for each of their schools. These funding agreements are drafted as contracts, and elements of the agreement require academies to comply with statute law which would not otherwise apply to an academy.

They are regulated by the Department for Education through the Education and Skills Funding Agency. If they want to expand, then some powers are exercised by the education secretary, through the Regional Schools Commissioner (RSC) and the Head Teacher Board (HTB). So, MATs are subject to both private and public legal challenges and are regulated by both contract/regulatory powers. They do not therefore neatly fit any one legal category.

So, if someone has concerns that a MAT has a dominant role in a particular area, what can they do?

The starting point would be to look to the DfE’s decisions which have come through the RSC and the HTB. These could be challenged with a judicial review, an instrument through which a High Court judge is asked to determine whether a public body has acted unlawfully and outside its powers or otherwise in a way that is unreasonable or irrational. This is a matter for principles of public law rather than competition law, and interestingly, there is currently no case law in this area.

Given that there is limited guidance on the way in which decisions by the RSC/HTB are reached at present, you would have to base your argument that a MAT is dominating its local area more on educational standards rather than competition law.

In order for the CMA to exercise its powers of competition law, it would first need to determine that a MAT was a business undertaking economic activities in a relevant market. Further technical legal points arise when making an assessment about whether or not there is dominance in this market, or abuse. It is difficult to see how such arguments could be made successfully in respect of a MAT’s expansion.

Given the government’s continued drive towards academisation and free schools, it is likely that there will continue to be considerable debate about the growth of MATs and the way in which they are regulated. From a legal perspective, such concerns are likely to be addressed primarily through policy reform, using the principles of public law rather than competition law.