Private schools 'broke competition laws' over fees

The OFT criticised 50 independent schools in a provisional ruling, including Eton, Harrow and Winchester.

As a result of their "anti-competitive" collaboration, these schools succeeded in charging parents higher fees than would otherwise have been the case, the OFT said.

The schools now have several months to make their cases to the OFT before it reaches a final ruling.

The schools are facing "financial penalties" as a result of their action, the OFT said.

The OFT said the provisional ruling followed one of the largest investigations in its history.

It found that the schools had exchanged information on their plans for increasing the fees they would charge for boarders and day pupils between 2001 and 2004.

The system worked through a survey, updated regularly.

Known as the "Sevenoaks Survey", it was completed between February and June each year, detailing each school's intended fee levels the following September.

The information was then circulated in the form of tables among all the schools involved.

The tables were updated and sent round again between four and six times each year as schools "developed their fee increase proposals", 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 OFT said.

The schools involved were named as:

Ampleforth College; Bedford School; Benenden School; Bradfield College; Bromsgrove School; Bryanston School; Canford School; Charterhouse School; Cheltenham College; Cheltenham Ladies College; Clifton College; Cranleigh School; Dauntsey's School; Downe House School; Eastbourne College; Epsom College; Eton College; Gresham's School; Haileybury School; Harrow School; King's School Canterbury; Lancing College; Malvern College; Marlborough College; Millfield School; Mill Hill School; Oakham School; Oundle School; Radley College; Repton School; Royal Hospital School; Rugby School; St Edward's School, Oxford;

St Leonards-Mayfield School; Sedbergh School; Sevenoaks School; Sherborne School; Shrewsbury School; Stowe School; Strathallan School; Tonbridge School; Truro School; Uppingham School; Wellington College; Wells Cathedral School; Westminster School; Winchester College; Woldingham School; Worth School; and Wycombe Abbey School.

The OFT said its preliminary conclusion was that Truro School took part in the survey in only two of the three relevant years.

The Independent Schools Council (ISC) condemned the OFT's investigation as "a scandalous waste of public money".

The ISC said that the schools - all charitable organisations - did not know that competition rules applied to them.

The schools have been told they face fines and given until March next year to respond to the OFT's findings, the ISC said.

ISC general secretary Jonathan Shephard described the ruling as "Kafkaesque".

He said: "The law seems to have changed without Parliament realising - and without the independent sector being consulted - contrary to the Government's own strict guidelines on consultation.

"Schools are now being held liable for breaking a law which no one knew applied to them.

"The moment that schools realised that the law had changed they immediately stopped exchanging information.

"This was done before the OFT launched its investigation, and was quickly backed up by a Code of Practice agreed with the OFT.

"The OFT's broad assertion that sharing information produced higher fees is highly contentious.

"Fees in the independent sector rise in line with costs in the maintained sector, for the obvious reason that most of the costs are staff salaries and pensions.

"Schools - along with care homes and other charities - are concerned to keep their fees as low as practicable.

"Sharing information is an effective - though no longer legal - way of doing just that.

"The OFT has so far spent two and a half years and hundreds of thousands of pounds on this investigation.

"It is a scandalous waste of public money.

"The OFT needs a result for the sake of its own credibility.

"The OFT has failed to understand that charities have no motive for raising more money than is needed for charitable activities.

"All surpluses stay within the charity and must be used for charitable purposes.

"There is no possibility of any personal gain.

"The fines which the OFT intends to impose will diminish charitable assets, or force charities to raise charges - damaging the very people whom the OFT is supposed to protect.

"The arguments against fines are very strong, and will be made robustly as the process continues.

"The attack by the OFT on the charitable sector is something that should worry all charities.

"The OFT appears to have no understanding of the charitable ethos of sharing information.

"We have no doubt that exchange of information among charities in non-educational sectors still continues - and these are sectors which have never had an exemption from competition law

"Will charity shops and care homes be next?"