The United Kingdom Court of Appeal has ruled against Motorola Solutions in a landmark competition law case, solidifying government-imposed price controls on the company’s Airwave TETRA network.
This ruling effectively denies Motorola’s efforts to overturn a charge control order established by the Competition and Markets Authority (CMA) and is expected to cost the company over $1 billion in projected revenue this decade.
Court Rejects Motorola’s Appeal
The Court of Appeal (CoA) unanimously dismissed Motorola Solutions’ application for permission to appeal the CMA’s findings. The CMA had previously determined that Motorola was earning “supernormal profits” by maintaining a monopoly over communications network services for UK emergency services. Given the lack of competition, the CMA imposed a price cap in July 2023, reducing the cost by nearly £200 million per year.
Motorola had initially challenged the CMA’s findings at the Competition Appeal Tribunal (CAT), which also ruled in favor of the CMA. Motorola then sought permission to appeal to the CoA, arguing that the CMA had erred in its competition assessment and in evaluating Airwave Network’s profitability in 2021. The CoA, however, rejected these claims and upheld the CMA’s reasoning, bringing the case to a definitive close.
Impact on UK Emergency Services and Taxpayers
The CMA’s price cap ensures that the UK’s emergency services pay fair market rates for Airwave services. According to CMA estimates, without the intervention, Motorola would have continued to charge emergency services approximately £200 million per year above competitive market levels. These inflated costs would ultimately have been borne by taxpayers.
George Lusty, Executive Director of Consumer Protection and Markets at the CMA, welcomed the decision, stating:
“Our investigation showed that Motorola had been charging emergency services in the UK £200 million a year more than they would if the market was working well. The Court’s judgment today means that our price cap remains in place, which limits how much Motorola can charge emergency services for using its Airwave Network.”
Motorola’s Response
Motorola Solutions expressed disappointment with the ruling but emphasized its commitment to providing high-quality, mission-critical communication services for UK emergency services. In a statement, the company said:
“While we continue to strongly disagree with the CMA’s unprecedented decision, we are focused on moving forward and continuing to deliver this world-class emergency communications service for the UK’s public-safety users.”
Background of the Investigation
The CMA launched its investigation into Motorola’s Airwave Network pricing in October 2021, citing concerns that the lack of competition was leading to excessive charges. Motorola had acquired the Airwave Network in 2016, shortly after securing a contract to develop the LTE-based Emergency Services Network (ESN). The ESN, originally intended to replace Airwave by 2019, has faced repeated delays and is now expected to be operational no earlier than 2029. As a result, UK emergency services remain dependent on Airwave, giving Motorola a dominant position in the market.
The CMA’s investigation revealed that Motorola’s Airwave revenues accounted for only 7% of its global income but contributed to approximately 21% of its global pre-tax profits. This led to the decision to impose price controls, effectively reducing Airwave’s projected revenue by more than 40% for the contract extension period from 2023 to 2029.
Legal and Financial Implications
The CoA ruling marks the final legal hurdle in this case, as Motorola has no further avenues to challenge the CMA’s decision. Lord Justice Nicholas Green, writing the unanimous opinion, acknowledged the significant financial impact on Motorola but found no basis for overturning the CMA’s findings:
“There is no proper basis upon which this Court can interfere. For all these reasons, I would refuse permission to appeal.”
This decision reinforces regulatory oversight in the telecommunications sector and ensures fair pricing in critical public service contracts. Moving forward, Motorola Solutions must operate within the established price cap, while the UK government continues its efforts to transition emergency services to the long-delayed ESN.
