A good school ruined by teachers who resemble ostritches !
Obviously I don't know all the details of this as I've only got what has been written here to go on, but the above comment does seem a little unfair. Without any evidence the school can't really do that much. As it stands the only evidence is your childs word (and I'm not suggesting your child is lying), so the school has to make a judgment based on the evidence that they have seen. You've already stated that the "bully" has received merit for good behavior, so the staff are clearly seeing a different side to the child than you are. Faced with that, what are they supposed to do?
If schools were to react to every claim of bullying by punishing the accused then it'd soon lead to false claims being made by kids looking to get revenge for the slightest thing... Kids are smart and can be very vindictive!