The Guernsey Competition and Regulatory Authority has ruled that restrictive non-compete clauses in partnership agreements can break Guernsey competition law.
This decision aims to support fair competition, innovation, and choice for local consumers.
Non-compete clauses, which can prevent individuals from starting new businesses or working for competitors, may stifle innovation and limit options for the community.
In a recent case, a complaint from a former Medical Specialist Group (MSG) doctor highlighted how such a clause prevented him from setting up First Contact Health, a new business offering services like physiotherapy and MRI scanning.
The Guernsey Competition and Regulatory Authority (GCRA) found MSG’s actions unfairly restricted competition and therefore violated the law.
While non-compete clauses can be legitimate in some cases, they often harm economies by limiting job options, suppressing new ideas, and making it harder for startups to succeed. This also keeps wages low and slows economic growth.
The ruling includes a fine against MSG, emphasising the importance of fair competition. It brings Guernsey in line with international trends, such as the UK’s plan to limit non-compete clauses to three months and proposals in the US to ban them entirely.
The decision ensures professionals in Guernsey have the freedom to innovate and contribute to a thriving local economy.
Following the publication today of the GCRA’s final decision and penalty, the MSG chair Dr Steve Evans said: “After a process which has gone on for almost six years, we welcome the fact that the matter is now closed.
“The GCRA’s findings today relate to an historic issue over the length of our non-compete clauses, as they were before we voluntarily reduced them in 2018. We took this action long before the GCRA began its investigation.
“The Bailiff recognised we had done this in his 2023 judgment which upheld in full our appeals against the original decision and penalty from 2022, when he commented that he regarded the position with respect to the non-compete clauses before 2018 as ‘little more than historic’.
“Although we take issue with significant parts of the GCRA’s decision-making process, the legal and management costs of an appeal, together with the fact that the GCRA has reduced the fine to £96,635 (almost a 95% reduction on the original proposed penalty of £1.5 million), mean that it is not economic to expend more time and resources on an appeal.
“Our motivation throughout this time has been to protect the emergency and elective healthcare services that we provide to the people of Guernsey under our contract with the States. We are pleased that we can now focus all our efforts on our primary purpose as doctors of improving the health of the community we serve.”
In response to the GCRA’s ruling, First Contact Health commented: “We welcome the decision from GCRA. We are grateful for the opportunity to be able to provide an innovative business model within medical healthcare. Our mission has always been to offer islanders greater choice for their medical needs.
“Innovation brings with it the ability to lower prices to make private healthcare more affordable. We hope this ruling encourages greater collaboration between all healthcare professionals across both private and public sectors to create better pathways and options that ultimately lead to the best possible outcomes for the people of Guernsey. We also believe this ruling will encourage doctors and specialists in healthcare to come and work in our beautiful island.”