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The Impact Of Competition Law On The Pricing And Competition Dynamics In The Indian Education Sector

Educational organisations are commonly seen as entities that offer exceptional services to the community, as they contribute to the development of well-rounded individuals who can positively impact the generations to come. In the contemporary era characterised by globalisation with a rapidly evolving economy, a new breed of entrepreneurs known as Neo-Entrepreneurs has recognised a need among worldwide youths for excellent schooling and a robust set of abilities as essential for their survival.

Consequently, these entrepreneurs are prepared to allocate substantial financial resources towards meeting this demand. This describes the context in which the principles and practises of the business community, such as mergers, cartels, and market abuses, are relevant to the growing organisations operating within the Educational Profession.

Competition law governs the conduct of entities engaged in the provision of products or services, with the objective of safeguarding the welfare of customers. The primary goals of the Competition Act, of 2002 encompass safeguarding the needs of consumers & fostering the establishment and maintenance of competitive marketplaces. The attainment of productivity and effectiveness in enterprises, particularly the ones operating within the Educational industry, hinges upon the presence of efficient competition.

Healthy competition fosters innovation, cost and production effectiveness, and heightened customer pleasure, hence motivating enterprises to maintain a competitive edge over their rivals. Nevertheless, the intense competition within the marketplace also fosters motivations for unscrupulous traders to engage in illegal conduct in order to gain an advantage over their competitors.

Consequently, it becomes imperative for regulatory bodies like the Competition Commission of India (CCI) to enhance their efforts in conducting investigations, promoting awareness, and enforcing regulations. The necessity for these behaviours is demonstrated by the content of the following article.

In the larger context of the present paper, the term "Educational Sector" pertains to the Economic Marketplace encompassing educational organisations that provide degrees, diplomas, and skill-based certificate courses, delivered via online as well as offline methods.

Given the evident competitiveness of every market within the Educational Sector, it is unsurprising since several antitrust disputes were made before competition regulators, both in India as well as other common law jurisdictions. Moreover, we will examine potential competition concerns by referencing pertinent legal precedents or by providing examples of specific circumstances that could be considered as falling within the scope of anti-competitive practices.

Peer-group institutions sharing information:
Numerous educational organisations engage in either official or unofficial collaborations. In a formal context, these entities may take the shape of academic groupings or associations. In an informal setting, these can be identified by the occurrence of recurrent meetings among administrators representing institutions that share comparable characteristics and circumstances.

Competition regulators and competition policies acknowledge the potential mutual advantages for customers which may arise from the formation of such organisations, as they establish norms and facilitate the exchange of optimal practises. In instances of this nature, antitrust considerations may arise solely in the presence of substantiated indications of a deficiency in autonomous decision-making amongst the participants in the association, or if there's observable proof of concerted actions that will detrimentally impact consumers.

Jointly establishing admissions protocols:
Numerous partnerships or consortia have been established among colleges and universities in order to jointly administer the admissions processes. These contracts or agreements regulate the timing of application submissions, the standardised collecting of fees for the administration of entrance tests, and the joint organisation of counselling sessions, among other aspects.

At first glance, these arrangements do not elicit concerns related to Anti-trust regulations, as they facilitate the optimisation of admission processes for learners by combining applications and examination dates across different colleges and universities. However, in more recent times, these contracts have come under examination due to their exhibit of characteristics associated with Horizontal Anti-Competitive agreements.

In India, an NGO ijustice affiliated with the Centre for Civil Society, has submitted data u/s 19(1)(a) of the Competition Act, 2002, concerning CLAT and associated Convenors. According to iJustice, it has been claimed that the consortium of 14 law schools responsible for administering the yearly CLAT to National Law Schools frequently raised the application charges from rupees 3,000 to Rs 4,000, as well as increasing the "pre-admission advance deposit" from Rs 50,000 to Rs 1 lakh, at their respective positions discretion.

Nevertheless, the decision was made by the CCI that it lacked the jurisdiction to examine the accusation due to the reality that the CLAT core committee did not meet the criteria of being an"enterprise" as defined in section 2(h) of the Competition Act. Instead, it was deemed to be a MOU, a binding contract, or simply a contract among the 14 universities, that did not meet the requirements to be recognised as a "person" throughout the context of the Act.

However, it would have proved beneficial for the Competition Commission of India (CCI) to examine the precise meaning of a "Horizontal Anticompetitive Agreement" as outlined in s. 3(3) of the Act, 2002. By doing so, the CCI might've analysed the situation in relation to these definitions, thereby highlighting the occurrence of anti-competitive conduct in the present case.

Commercial activities in the ancillary markets:
Education is a multifaceted economic commodity that encompasses various auxiliary commodities necessary for the optimal acquisition of its primary function. The pricing of the primary assistance, namely academic and research tasks, is sometimes contingent upon the calibre of the accompanying products and auxiliary services. Educational facilities may potentially engage in arrangements with vendors of ancillary items, such as books and uniforms, in order to limit the ability of rival schools to acquire high-quality additional products.

Situations were observed in which educational organisations, specifically schools, made efforts to take advantage of consumers via the utilisation of monopoly supply contracts and linking and bundling arrangements. The aforementioned behaviour leads to Tied Agreements or various forms of Vertical Anti-Competitive behaviour, that are proscribed u/s 3(4) of the Competition Act, 2002 in India.

In the legal dispute of Sunshine Books, Ltd. v. Temple University, the plaintiff, who operated a bookshop specialising in educational textbooks, conducted their business by selling textbooks from a trailer stationed on public streets adjacent to the University bookshop.

The individual expressed dissatisfaction with the University bookstore's one-week promotional sale, known as the "manager's special," which provided a 15% discount on approximately 50 undergraduate book titles. They argued that this initiative by Temple University aimed to establish a monopoly over the distribution of undergraduate textbooks for courses to its learners through an aggressive pricing strategy, thereby contravening the regulations outlined in the Sherman Act of the US.

Temple University filed a motion for summary judgement in order to protect themselves, asserting that the price reduction exceeded the median variable cost and thus could be considered non-predatory. The request for summary judgement was approved by the trial court, however, the appeal court subsequently overturned this decision and sent the case back for further examination of factual matters pertaining to price or expenses.

Merger (Combination) control:
The terms combination and merger are frequently employed synonymously. S. 5 of the Act delineates various kind of Mergers or Amalgamations that might be categorised as Combinations, which include as per the provisions of the Act.

In a general sense, the term "combination" as defined by the Act refers to various actions, including the acquisition of control, shares, voting rights, or assets. It also encompasses instances in which an individual gains authority over a company while already having either direct or indirect influence throughout a different company operating rivalry.

Additionally, it encompasses amalgamations and mergers of or among organisations, but only while the individuals involved surpass the criteria established in the Act. The Act delineates the limits in relation to assets or revenue both within India and outside.

The Competition Commission of India (CCI) possesses the authority to grant or deny approval for mergers that might have a detrimental impact on the education industry. This phenomenon occurs due to the potential of mergers amongst dominant entities to establish monopolistic conditions inside the marketplace.

There is a lack of reported incidents pertaining to this feature within the Indian context. Nevertheless, the Office of Fair Trading (OFT) in the United Kingdom is currently investigating several mergers within the sector. In both instances, legal proceedings were absent due to the universities' market shares being insufficient to exert any influence on the pertinent markets.

The aforementioned cases indicate that colleges and universities have come to be perceived not merely as business ventures, but additionally as entities subject to scrutiny and potential prohibition of mergers in future instances.

Education organisations may engage in various forms of anti-competitive behaviour, including the abuse of prevailing position in the marketplace and the implementation of aggressive pricing strategies. Additionally, the misappropriation of intellectual property rights in studies represents another potential area during which subsequent years anti-trust actions may emerge.

The conclusion drawn is that there are only a limited number of regulations and guidelines pertaining to Competition Law issued by both the Competition Commission of India (CCI) and the Ministry of Corporate Affairs. The regulations in question are specialised to particular industries.

There's a need for increased effort in this particular field. The CCI ought to apply its regulatory authority and proactively scrutinise the educational industry for instances of anti-competitive activity, thereby initiating inquiries autonomously. Subsequently, I believe that CCI ought to undertake efforts to raise consciousness amongst the general public and participants about the need of adhering to Anti-Trust rules and providing assistance to the Commission whenever necessary, as it is preferable for avoiding issues as opposed to having to address them later.

  1. (2019). Competition Act, 2002 � provisions related to Combinations. [online] Accessed 30 Aug. 2019.
  2. Fels, A. (1998). The impact of competition policy and law on higher education in Australia. [online] Accessed 30 Aug. 2019.
  3. However, wherever these terms might be used in case laws, each of these types of markets would be considered a separate "Relevant product market" as defined under section 2(t) of the Competition Act, 2002.
  4. Section 2, Sherman Act, 1890
  5. The Competition Act, of 2002, S.19(1)(a).
  6. The Competition Act, of 2002, S.2(h).
  7. The Competition Act, of 2002, S.3(3).
  8. The Competition Act, of 2002, S.3(4).
  9. The Competition Act, of 2002, S.5.
  10. The merger between City College Manchester and the Manchester College of Arts and Technology and merger concerned the University of Manchester, the Victoria University of Manchester and the University of Manchester Institute of Science and Technology. See IBID 5.
  11. Umar, M. (2017). Fee hike in private schools: Ambiguous regulation of fees is making education a privilege. [online] Accessed 30 Aug. 2019.
  12. (2014). CCI: CLAT convenors immune from anti-trust scrutiny for unilateral fee-hikes. [online] Accessed 30 Aug. 2019.
  13. Zimbroff, J., Suryanarayan, S. and Scott, T. (2019). Antitrust Issues Affecting Colleges And Universities. National Association of College and University Attorneys NACUANOTES, [online] 13(3). Accessed 30 Aug. 2019.

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