Are UK universities a giant cartel?

Yesterday morning, I heard on the radio news that Britain’s third great university (as anointed by the education expert Captain Blackadder) has declared that it too intends to charge the maximum £9,000 student fee. They are not alone. According to the list compiled by the BBC, something like 70% of the universities that have declared their position will charge the maximum for their courses.

Am I the only person wondering how long it will be before somebody starts to whisper the words ‘cartel’ and ‘OFT investigation’…..?

The Competition Act 1998 prohibits agreements between undertakings that may affect trade within the UK or that have as their object or effect the prevention, restriction or distortion of competition within the UK – otherwise known as cartels. The legislation applies to “undertakings” meaning any entity engaged in economic activity and is designed to protect purchasers.

The turnover of many universities runs to tens if not hundreds of millions of pounds and exceeds that of many more obviously commercial entities engaged in economic activity. Universities all offer similar services in a similar marketplace and they work closely together when it comes to policy issues such as student fees. And now the majority are proposing to charge the same level of fees for their services. In other industries, this might prompt an OFT investigation, to see whether any anti-competitive activity has occurred.

But maybe it will not be an issue for the universities. It is entirely possible that there is some exemption from competition laws that I am not aware of, either in the fees legislation or in the remit of the Office for Fair Access (OFFA). The OFFA needs to approve the proposed fee levels and it may be that the provisions for promoting equal access serve to address the evil of distorting competition that would normally follow from price fixing. Or maybe, each university’s circumstances are so different that they are in fact operating in a variety of different marketplaces.

Cue also a philosophical debate about the primary purpose of a university (economic activity or charitable purpose?) and whether students are ‘purchasers’ of a service.

Can anyone shed any light on this for me?

PS: for those of you not familiar with the teachings of Captain Blackadder, his statement (made during Blackadder Goes Forth: General Hospital) is here, thanks to the IMDB. And the Third Great University is here.

SB

1 Comment

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One response to “Are UK universities a giant cartel?

  1. cartel is exactly the right word. they certainly behave like it. and those stakeholders who try to step on their toes or criticise them get quashed. they behave pretty badly.
    the he white paper introduces competition though and opens the sector up to private providers. so hopefully those complacent, arrogant and unethical universities will have to pull their socks up.

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