CMA publishes updated guidance on collaboration between higher education providers

Background to CMA guidance

As the Office for Students focuses its priorities on a resilient HE sector and helping monitoring financial stability in the sector, there have been increased calls for HE providers to collaborate.

Whilst some types of collaboration are encouraged, other types of collaboration may be more problematic from a competition perspective, resulting in uncertainty in the sector about how far universities can collaborate. To address this, the Competition and Markets Authority (CMA) has recently published new guidance. The guidance, Collaborating with other higher education providers, aims to set out some general principles for senior leaders considering joint initiatives, and clarifies how institutions can work together without infringing UK competition law.

The CMA’s updated guidance does not change the underlying law, but examines what to look for in assessing if there are any competition issues with different types of joint working.

We have set out below a summary of types of collaboration which are likely to be permissible and highlighted some issue to watch out for.

How does competition law apply in the HE sector?

Competition law applies across the whole of the UK to ‘undertakings’ who operate in a market for goods and services, regardless of their legal status or how they are financed. This means that charities and educational institutions can be subject to competition law. At the student level universities will compete with other HE institutions (HEIs) for the provision of undergraduate and postgraduate courses. Universities may also compete with one another and with other service providers in relation to ancillary activities such as the provision of conference facilities and commercialisation activities.

The guidance

The guidance covers a broad spectrum of collaborative activity, from structured contractual partnerships to more informal working relationships and shared initiatives.

Examples of collaboration that are unlikely to raise competition law concerns:

Jointly purchasing goods or services: Working together with other providers for procurement purposes in areas such as buying equipment or wellbeing services, which can help maximise savings and efficiencies.
Sharing services and infrastructure: Sharing back-office functions, libraries or sports facilities to reduce costs. Whilst this may not be problematic from a competition law perspective, in practice it may raise cultural issues.
Partnerships for course provision (in some cases): Collaborating in course provision, for example, by jointly running courses where there are many providers offering a course nationally and the course tends to attract students from across the country who will have other good options.
Facilitating staff and student movement: Working together with other providers to facilitate necessary student and staff movement from one provider to another. For example, if a course is closed. This is a commonly asked question, so the clarification will be useful to HEIs.
Jointly engaging with policy-makers: Participating alongside other providers in conversations with national or local government, regulators and public bodies. For example, roundtable discussions about improvements to policy and regulation to support the sector.
Benchmarking: Exchanging non-competitively sensitive information with other HEIs to make more informed decisions (for example, about purchasing goods and services) or to become more efficient (for example, through benchmarking). Where information may be commercially sensitive, consider using a third party, such as an independent consultancy, to anonymise and aggregate data.
Research and development agreements: Collaborating with other HEIs where each party brings different expertise and the research could not be conducted by one party alone.

Issues to watch out for

The guidance highlights the risks of exchanging information with competing providers when it involves information that is ‘competitively sensitive’. Competitively sensitive information is information that reduces competitive uncertainty in a market or that can influence the competitive strategy of the recipient for example, discussions regarding admission tariffs.

Other areas which can be problematic include non-compete clauses, unfair allocation of intellectual property rights and long term agreements which tie in a provider.

Assessing whether collaboration is appropriate

To support decision making, the CMA outlines several key points that HEIs should consider before entering collaborative arrangements. These are:

Define the purpose of the collaboration, what it aims to achieve, what benefits it may bring about and who may benefit
Articulate why the full benefits of collaboration could not be achieved by each HEI acting alone
Consider what effect the collaboration may have on competition – for example, what impact it may have on choice for students
Make sure that any reduction in competition brought about by collaboration does not go beyond what is strictly necessary to achieve its beneficial goals
Be careful that discussions do not stray into the sharing of competitively sensitive information such as confidential details about strategy.

What this means for HE providers

The guidance expands on some of the CMA's thinking published previously.

While the guidance sets out some useful application of the competition law principles to the HE sector, in practice HEIs will need to carry out an individual assessment of more complex arrangements to identify any competition concerns.

At VWV we have experience of acting on all types of collaboration between HE providers. If you are considering a joint initiative with another HE provider, please get in touch with Morag Roddick, Stephanie Rickard or your usual VWV contact and we would be happy to discuss it with you.