5 March 2018 by and Competition Alert

What do the Competition Commission and the school uniform market players have to say about anti-competitive behaviour in the school uniform sector?

On Monday, 5 February 2018, the Competition Commission in partnership with the National Education Collaboration Trust hosted a dialogueSA discussion on the topic of school uniforms. The commission is currently investigating complaints relating to the cost of school uniforms.

Memories of the yearly back to school rush may flood back and serve as a reminder that much of the sales in the school uniform industry occur only for short periods each year. On the face of it, the school uniform industry must contend with hyper-cyclicality even beyond that experienced by general clothing retailers.

According to the Commission, its statistics have shown that out of 1595 schools surveyed, 32% of all private schools and 33% of all so-called Model C schools have concluded exclusivity agreements with school uniform manufacturers. There may also be de facto exclusive arrangements that subsist without written agreements. This means that many school uniform retailers and suppliers do not face competition in the manufacture and sale of a particular school’s uniform.

But what really drives the perceived high prices of school uniforms? Is it the apparent lack of competition that arises through these exclusivity arrangements or is it the need for school uniform suppliers and manufacturers to recoup reasonable returns in a very short period of time?

Understandably, school uniform manufacturers and retailers highlighted that the mark-ups on uniforms have to cover similar overheads compared to an ordinary clothing manufacturer and retailers over the course of a full year. One must have some sympathy for the difficulties in trying to operate a business only seasonally where fixed or semi-fixed costs may be high.

School uniform manufacturers also alleged that it often occurs that schools will suddenly change the uniform design once the manufacturing process is underway, resulting in manufacturers being burdened with high levels of unsellable stock. There appear to be many manufactures who do not conclude formal written agreements with schools and they often feel that they are left with no remedy in this regard. It is unfortunately difficult to see how this is a competition problem.

Unavoidably, the discussion also delved into the educational pros and cons on the school uniform as an institution. Clearly uniforms impact on the affordability of giving a child a basic education. However, there is arguably also educational and social value in a uniform. The value of school uniforms was supported by the Minister of Basic Education, Angie Motshekga. She said:

Children are very cruel people and we need to save them against themselves. Equality at schools is important especially for poor pupils as they will feel comfortable and have a sense of belonging.

Daya Chetty of the South African Principals Association made a similar comment saying:

A single standard in class creates a sense of belonging. A safe and healthy learning environment includes equality for pupils and reduced distractions in class.

There were various suggestions as to how to address the cost of school uniforms. The Competition Commission appears to be leaning in favour of removing exclusivity arrangements or introducing a form of regulated competitive bidding for uniforms. Solutions proposed by the Southern African Clothing and Textile Workers Union (SACTWU) suggested that “all school uniforms should be manufactured in state run factories”. The Union further proposed that Value Added Tax for school wear should be done away with.

Although the debate highlights, once again, the often-insurmountable barriers that the cost of education poses to many children in a country with high levels of inequality, we hope that the Competition Commission will take a clear-eyed approach to assessing the issues before it within the legislative framework presented by the Competition Act. It is not clear whether exclusivity arrangements are the cause of competition concerns or a side-effect of the risk inherent in operating in a market which presents the peculiarities of the school uniform sector.

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