MSG's non-compete clauses are unlawful, says regulator

Friday 17 September 2021

An independent regulator has ordered the MSG to remove the non-compete clauses on its current and former consultants - or face fines for breaching competition law.

The Guernsey Competition and Regulatory Authority says the agreements - which prevent those consultants from supplying medical services to Guernsey consumers for a period of time after leaving the MSG - infringe section 5(1) of the 2012 legislation covering non-compete clauses.

This section of the law prohibits agreements which have the object or effect of preventing competition within any market in Guernsey for goods or services.

In a statement, the regulator said it has “directed MSG to remove these clauses from its agreements with its consultants and to inform former consultants still subject to a non-compete clause, in writing, that those clauses are void and unenforceable.”

Pictured: The non-compete clauses are two years for former partners and 18 months for associates.

The GCRA added: “It will therefore now consider whether it would be appropriate to issue a draft penalty statement to MSG in respect of the non-compete clause.”

MSG Chair Gary Yarwood expressed his “extreme disappointment” with the regulator’s verdict, saying the specialist group had only received the full 71-page report on Thursday morning. 

“We need 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,” he said.

“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."

Pictured: Dr Gary Yarwood, left, said the non-complete clause is in place to protect emergency health care it provides as part of a partnership with the States, represented here by Medical Director Dr Peter Rabey. 

“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.

Dr Yarwood insisted that removing this clause “will not make private care any cheaper or more accessible”.

In a provisional judgment last year, GCRA CEO Michael Byrne questioned whether that was the case. 

"Restrictive covenants are commonplace in partnership agreements and are used to protect the business of the partnership," said Mr Byrne. "But they should not go beyond what is necessary and so restrict fair competition in the market to the detriment of those in need of medical care.

"In this case, we are concerned that the duration and scope of the restrictions imposed by MSG went beyond what was necessary and so potentially stifled choice."

“This could make it extremely difficult for us to recruit"

Defending the non-compete clauses, Dr Yarwood responded: “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.”

A further announcement is expected from the MSG about what it intends to do next once the final report issued by the GCRA has been considered in full. 

Pictured top: GCRA CEO Michael Byrne.