The Competition and Markets Authority (CMA) has established a new Covid-19 taskforce to monitor market developments. It has identified that a significant number of recent complaints relate to pricing and refunds at nurseries which is likely to include schools with nursery provision. The CMA has issued a guidance note summarising its view on relevant laws which may be accessed here.
In most cases the CMA would expect a full refund to be offered if no service is provided by a nursery or other educational establishment because it is prevented by restrictions that apply during the current lockdown. This follows the CMA’s recent (April 2020) concern expressed to independent school’s that they must not engage in discussions with other schools about levels of discounts and/or refunds on schools fees that could be applied as a result of Covid-19. The CMA has the ability to impose significant penalties of up to 10% of total turnover if competition law has been broken.
The CMA anticipates that in the case of ongoing contracts, a parent may normally withhold payment for services not provided, however, the school or nursery may be entitled to a small contribution to its costs until services are resumed in certain circumstances.
The legitimacy of asking parents to pay a high sum in order to keep a place open for a child has been questioned. A key consideration here will be whether services are still being provided. If parents consider that they have been affected by unfair cancellation terms in the wake of Covid-19, they can report them to the CMA using the online form available on the CMA website.
The CMA has powers to take enforcement action if it considers that the law has not been complied with. This is the CMA’s view but we would recommend taking legal advice if this may impact on your own educational establishment. If you have any queries, please contact Emma Swann, Commercial Partner on [email protected] for further information. We will be circulating details of a forthcoming webinar on this and other related issues on the 21st May 2020 soon.