In October this year, the UK’s Office of Fair Trade (OFT) whose job it is to ensure that consumer interests are protected from business practices which stifle competition, wrote to 29,500 state and primary schools. The purpose of this missive was to ask the schools to review their uniform policies. A survey carried out earlier by the OFT had found two things. First, if uniform items can only be purchased from a certain supplier selected by the school or from the school shop, prices can be as much as £5 to £10 higher than if families were able to freely shop around. Secondly, 74% of the schools in the UK posed the restriction of buying only from a particular shop.
In India, as is typical, we don’t have data on how many schools indulge in such practices or what is the price difference between uniforms bought from the monopolistic seller and outside. But the matter seems widespread enough because with the start of the winter school session post Diwali vacations, this issue has incensed many parents who have raised it with consumer organizations. These in turn have written to the Competition Commission of India (CCI), the equivalent of UK’s OFT. The Delhi-based non-governmental organization Consumer Voice has written to the chairman of the CCI urging him to step in to curb such violations of the “consumer’s right to choice”. The Consumer Guidance Society of Vijaywada has written to the chairman of the CCI that “these unfair trade practices stifle parents from making an informed choice”. It says that schools are able to indulge in such restrictions because parents are ignorant of the provisions of competition law and think such practices are legally tenable.
So, what is the competition law that parents ought to know?
The Competition Act of 2002 has established a commission to “prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets”.
Many parents claim that the chosen supplier sells uniforms at exorbitant prices while if they had been given the option, they would have bought them cheaper elsewhere. The economics of the school shop is such that it should not be charging higher prices than those outside. As the fabric is the same, the school shop buys in bulk and stitches standard sizes. Since purchase and stitching happen at the same point, (often by one family) there’s no complex distribution chain. Hence the profit margins are high but they aren’t passed on to the buyer. In fact, the prices at school shops should be lower than what they are in the open market but angry parents say the shops take advantage of their monopolistic position and charge at will.
From the school’s point of view, identifying a single supplier helps to ensure consistency and good quality of uniforms, apart from convenience of finding everything right there in the school compound. Besides, the logo on the shirt and exact hue of the socks will be as per the school’s mandate and all schools are pernickety about such details. Personally, I prefer the convenience of buying my children’s uniform within the school’s premises. The effort of going to a shop in a market, petrol expense and the invariable fight for parking is not worth the money saved. Sometimes, older children can even go to the shop and buy some items themselves, which makes it even easier. But the point of this parental debate is that there should be a choice about whether you want this convenience or prefer the money saved.
In response to this issue that raises its head at the start of each school season, the Union human resource development (HRD) ministry is in the process of bringing a draft “Prohibition Of Unfair Practices in Schools Bill, 2012”, to prevent malpractices of schools. Apart from the demand for capitation fee, corporal punishment, any insistence on purchase of books, uniform, stationery or other materials from a particular shop will be a punishable offence with imprisonment for a term extending to three years, according to the draft bill. The bill is expected to be introduced in the winter session of the Parliament if it gets a hearing amid the stormy scenes about multi-crore scams.
I wonder how embarrassing it will be for an economics teacher if some senior students who are taught the subject point out this issue to their teacher when the class is taught the chapter on monopolies. That may not happen though. One parent recalls that her teenage daughter was mortified when she threatened to raise it in the parent-teacher’s meeting. A parent in a Vijaywada school filed a case in the local district consumer court and withdrew it at the last minute, just before the case could come up for hearing, as they feared a backlash by the school authorities which would affect their child.
Fear plays a huge role in our tolerance of malpractices. Far from the arena of schools, in the world of Bollywood, this month actor Ajay Devgn filed a case with the CCI stating that Yash Raj films had flexed its filmy muscle to make an exclusive deal with single-screen theatres to release their movie Jab Tak Hai Jaan which didn’t allow enough scope for exhibition of his own movie Son of Sardar which was planned for release on the same day. The CCI ruled in favour of Yash Raj, saying that Devgn “did not submit enough data about market share or economic strength to show how Yash Raj Films was a dominant player in the market”. Whatever. All I know is that last Friday, there was absolutely no choice—not even Hollywood releases—for a viewer except to watch either of these movies. Clearly, stifling the competition through unfair means is practised across the board—from mighty cinema producers to the school in your locality.
Vandana Vasudevan is a Delhi-based writer on urban consumer and civic experiences. Your comments are welcome at email@example.com