The Competition Commission of Pakistan (CCP) has issued show cause notices to seventeen major private school systems for allegedly abusing their dominant position by compelling parents to purchase expensive, logo-branded notebooks, workbooks, and uniforms exclusively from school-authorized vendors. The action has been taken to safeguard millions of school-going children and their families from unfair pricing practices.

The enforcement action follows a detailed suo motu inquiry initiated on the basis of numerous complaints from parents, guardians, and other stakeholders. Complainants alleged arbitrary fee hikes, non-transparent selling practices, and the bundling of mandatory branded school supplies, effectively leaving families with no choice but to purchase these items at inflated prices.

The school systems under scrutiny include: Beaconhouse School System, The City School, Headstart, Lahore Grammar School (LGS), Froebel's, Roots International, Roots Millennium, KIPS, Allied Schools, Super Nova, Dar-e-Arqam, STEP School, Westminster International, United Charter School, and The Smart School, among others. These school networks operate hundreds of campuses nationwide and collectively educate millions of students, giving them considerable influence over enrolled families.

Inquiry Findings: Students Declared “Captive Consumers”
The CCP’s inquiry revealed that parents were mandated to buy logo-bearing notebooks, workbooks, uniforms, and other ancillary school products from exclusive school-authorized 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 CCP defined the relevant markets as:
1. The provision of education services to enrolled students, where each school enjoyed a 100% market share, making students “captive consumers”; and
2. The market for ancillary school products, which became the “tied market.”

The inquiry report concluded that:
• Many study packs were up to 280% more expensive than similar items available in open markets.
• Leading school systems 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.
• Mandatory branded supplies and restrictive trading conditions violated Sections 4(1) and 4(2)(a) of the Competition Act, 2010.

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 across Pakistan.

Private educational institutions account for nearly half of all student enrollment in the country. With inflation already straining household budgets, the imposition of overpriced branded materials further burdens families and raises concerns about excessive commercialization within the education sector.

CCP has directed the seventeen school systems to submit written responses within fourteen (14) days, appear before the Commission through duly authorized representatives, and explain why enforcement orders under Section 31 and penalties under Section 38 should not be imposed. Failure to comply may result in ex-parte proceedings. Under the law, CCP may impose a penalty of up to 10% of the annual turnover or PKR 750 million, whichever is higher, for such violations.

Credit: Independent News Pakistan (INP)