Following an investigation, the Guernsey Competition & Regulatory Authority (GCRA) has found that the Medical Specialist Group LLP (MSG) has infringed Guernsey Competition Law by entering into agreements with its consultants that prevent lawful competition in Guernsey.
MSG entered into agreements with its consultants that contained non-compete (Restraint of Trade) clauses. Restraint of Trade clauses prevent business leavers from using confidential information or exploiting client contacts in a way that would undermine their previous firm. These clauses are common in commercial agreements and can be relied on provided they do not go further than what is strictly necessary. Under Guernsey competition law, such restraints cannot limit choice for consumers to the extent that they prevent a business from operating and competing without strong supporting reasons.
The GCRA found that MSG’s Restraint of Trade clauses went beyond what was strictly necessary and therefore had the object of preventing competition. The clauses stopped consultants providing medical services in Guernsey for prolonged periods of time after they left MSG and MSG was not able to demonstrate that it could not operate without the restrictions. This meant that they were prohibited under Guernsey Competition Law.
Restraint of Trade clauses that go beyond what can be justified can harm competition by stopping leavers from offering consumers competing goods or services. In this case, the Restraint of Trade clauses meant that departing consultants could not offer alternatives to MSG for those seeking medical treatment in Guernsey for an unjustified long period of time set by these clauses. The restrictions therefore threatened to deprive Guernsey consumers of medical services that could benefit them through quicker access to medical treatment, less expensive alternatives, greater convenience, and other innovations that competition can bring.
It is the GCRA’s expectation that this decision will enable wider accessibility of medical services in Guernsey, potentially less expensive treatment and contribute to reducing the time people need to wait for treatment.
MSG has been directed to remove the Restraint of Trade clauses from its existing consultant agreements. It has also been directed to inform previous consultants that the Restraint of Trade clauses are void and unenforceable, which will allow those consultants to offer services in Guernsey if they wish to do so. The GCRA will now consider whether it would be appropriate to issue a draft penalty statement to MSG for breaching the competition law.
In response, Gary Yarwood (pictured), consultant anaesthesia and Intensive Care Medicine and Chair of the Medical Specialist Group, said “The reason we have this non-compete clause in place is to protect the emergency and elective health care we provide to the people of Guernsey under our contract with the States. Without the clause, a consultant could leave the MSG and set up immediately in private practice, taking with them the private patients they had established a relationship with while at the MSG.
“This could then make it extremely difficult for us to recruit a new consultant to cover that specialty. Private work is a small percentage but an important part of the package for attracting new consultants. We need really high quality doctors to work in a consultant-only service and there is an extreme shortage of such doctors in the UK and globally.
“Removing this clause will not make private care any cheaper or more accessible – there is a large established market in private health care with a great deal of choice. What it will do is seriously affect the many thousands of contract patients who rely on the health care we provide under the States contract, and all islanders who rely on our emergency care.
“We are therefore extremely disappointed with the GCRA ruling. GCRA’s 71-page report was only received this morning. The MSG will now need to take time to review the findings properly and consider all available options in order to protect the service that we provide to the people of Guernsey.”
