GCRA - Half Year Report 2023

In compliance with agreement between
the Guernsey Competition & Regulatory
Authority and the Committee for
Economic Development
GCRA Half
Year Report
for 2023

HALF-YEAR REPORT
FOR 2023
Supporting and maintaining
well-functioning markets
Merger and acquisition
Markets can work against the interests of consumers when competitors merge or acquire
one another. In these circumstances there is a risk that the most effective way consumers
can ensure value for money for the goods or services they buy is weakened, as the
commercial power of such businesses increases not from meeting their needs better
but from fewer alternatives.
The GCRA therefore looks at transactions in case they pose those risks to consumers and
can block them or otherwise require concerns to be addressed. In the first half of 2023, the
GCRA received four merger applications, with two cleared by the end of June. The average
clearance days for mergers considered by the GCRA to date is 15 days.
The GCRA supports development and delivery of Government policy, in
particular, in the sectors subject to economic regulation to achieve the best
outcome for Guernsey consumers.
The GCRA was also consulted on the proposed exemption by the Committee for Economic
Development of the acquisition by Sure or Airtel from the merger notification regime. The
GCRA provided two substantive responses setting out its views which were published at
the same time as the Committee lodged its policy for States debate.
Business circuits/Private circuits
price controls
GCRA review of costs of wholesale provision
of these services provisionally concluded
these should be lowered by 18% on
average from 2024. This will lower the cost
of doing business in Guernsey, particularly
for businesses heavily reliant on ICT whose
associated business connectivity costs
are significant.
Broadband price controls
The rollout of fibre across Guernsey
is a significant change in the network
infrastructure technology of the island.
Ensuring access is fairly priced has
been a priority in the first half-of 2023.
It follows the GCRA’S workstream on
protection of emergency call access
for vulnerable households in 2022. Its
provisional conclusion is that the cost of
these services needs to come down by
11% if prices are to be a fair reflection
of costs.
Local markets play
a central role in
Guernsey’s sustainable
prosperity which in
turn rests on their
ability to serve
consumers well.
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HALF-YEAR REPORT
FOR 2023
Supporting and maintaining
well-functioning markets
GCRA action saves Guernsey property buyers £13.2m
The GCRA, in line with similar bodies, looks
to review the benefits of its role in the
market post its interventions. In the first
half of 2023 the conclusion of independent
research commissioned was published.
The study analysed the impact of ending
the practice of charging fixed percentage
legal fees for conveyancing. In 2013,
because of the GCRA encouragement
to eliminate potentially anti-competitive
practices in the Bailiwick, Guernsey’s Bar
removed its professional conduct rule that
set legal fees for property conveyancing
transactions at 0.75% of the realty value,
enabling providers of these services to
compete on price.
Critical Economics analysis of transactions
shows that, during the last decade, total
realty property transactions amounted to
£5.8bn, on which conveyancing legal fees
amounted to £30.2m or an average fee
of 0.52%. Critical Economics concluded
that “undoubtedly, the cessation of a
fixed percentage legal fee in the local
conveyancing market has been very
beneficial to the property market.”
“It has never
been more critical
to maintain the
Island’s economic
competitiveness,
promote growth,
continue to meet
international standards
(including World Trade
Organisation rules and
existing trade agreement
commitments) and
negotiate new trade/
service agreements.”
GOVERNMENT
WORK PLAN 2023-25:
the midterm reset
Investing in Islanders,
our Island and our Future
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HALF-YEAR REPORT
FOR 2023
Supporting and maintaining
well-functioning markets
Keeping the operation of markets and regulated companies under
review to identify and address new forms of detriment and issues for
potential action, and thereby to promote trust in markets.
The GCRA believes that trust in markets us supported when: the rules are applied equally
and impartially, consumer perception of value and choice is positive, and the regulatory
framework is transparent, proportionate, and adaptable.
Competition law investigation in medical sector
The GCRA took a stance against excessive post-employment non-compete restrictions to
foster entrepreneurship, worker empowerment, and economic growth. This was initiated
by a complaint about a five year restriction being enforced by the Medical Specialist Group.
The concern was based on the need for innovation and free movement of talent, where
unfair restrictions hinder the growth of businesses and the economy in Guernsey. While
non-compete clauses can protect intellectual property, they are often used excessively to
prevent employees from working with competitors or starting their own businesses. GCRA’s
stance has already led to positive developments in local healthcare, such as First Contact
Health’s improved accessibility as well as changes to practices at the Princess Elisabeth
Hospital such as acceptance of MRIs scans from other specialists than the MSG.
Competition law investigation in
mobile market
This investigation concluded in 2021
with a finding of a contravention under
the competition law with a financial
penalty being issued in July 2022. The
contravention decision was appealed to
the Royal Court and the appeal was heard
in November 2023. The appeal against
the financial penalty was stayed, pending
the outcome the appeal against the
contravention decision.
The GCRA believes
that trust in markets
is supported when:
the rules are applied
equally and impartially,
consumer perception
of value and choice
is positive, and the
regulatory framework
is transparent,
proportionate,
and adaptable.
The Authority has sought to promote fair competition, consumer protection, and economic
growth, allowing businesses to attract talent without unnecessary barriers, thereby
contributing to a more vibrant economy in Guernsey. The matter went to the Royal Court
where the GCRA’s decision to prevent the effect of five year restrictions was not appealed
against, but the Royal Court remitted the decision back to the GCRA to redo the decision to
prohibit its two year restrictions based on the guidance given by the Court.
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HALF-YEAR REPORT
FOR 2023
Achievements
Competition law investigation into the provision of optometric services
Following a complaint, the GCRA opened
an investigation into the provision of
optometric services in Guernsey. It sent
out formal information requests and
analysed the responses to determine
whether providers of optometric services
had made anti-competitive agreements
with each other as alleged in the complaint.
The GCRA noted that some of the businesses
that provided information to it had very
effective competition compliance systems
in place and had made sure that their
discussions with other optometrists remained
compliant with competition law. However, the
investigation also revealed that although the
evidence did not clearly support the complaint
made, several businesses had engaged in
other types of collective action that might give
rise to further competition concerns outside
the scope of the original investigation.
The GCRA therefore decided to close the
original investigation but to keep this sector
under review. It also intends to publish
guidance to improve future compliance
in this area.
“To increase the
sustainability of health
and care services,
the Plan for Sustainable
Health and Care Services
portfolio will need to
focus on achieving the
following; To mitigate
cost increases - to reduce
the financial impact
of increasing demand,
resource competition
and new treatments so
that services remain
accessible and other
public services are not
unduly restricted...”
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HALF-YEAR REPORT
FOR 2023
Supporting and maintaining
well-functioning markets
Publication of information to support market monitoring
A report is compiled annually presenting information on the telecommunications sector
covering the previous calendar year. This is carried out as a pan-Channel Island initiative
with the JCRA.
Highlights and trends include:
• Average monthly consumer spending on telecommunications services was about £79.08
in 2022, fairly stable compared to the previous year.
• Total annual turnover increased to £70.8m in 2022 (by 1.6%).
• Total annual mobile revenue has increased since 2021 by 9.0%.
• Employment within the telecommunication sector increased in Guernsey by 7%.
• There has been a significant decline in the number of fixed call network minutes (20%),
continuing the decreasing trend since 2020.
• Meanwhile, text volumes have continued to fall slightly, decreasing by around 5%.
• The total number of mobile call minutes also decreased (by 12%).
• Broadband penetration rates in Guernsey (41.3 subscriptions per 100 inhabitants) were
higher than the OECD average (34.7) and similar to the UK (41.3).
• Data usage remains below the UK average (482 Gbytes per month): Guernsey subscribers
used on average 316 Gbytes per month (up 5.6% on 2021).
• Mobile data volumes increased by 9.6%.
In June 2023
the Authority
published its annual
telecommunications
statistics covering the
prior year providing
market intelligence on
developments in this
key economic sector.
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Contact us
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La Plaiderie Chambers,
La Plaiderie,
St Peter Port,
Guernsey,
GY1 1WG
Telephone: +44 (0) 1481 711120
Email: info@gcra.gg
Website: www.gcra.gg