British Competition Authority Considers Investigation of Motorola Related to Airwave, ESN
Monday, July 12, 2021 | Comments

The U.K.’s Competition and Markets Authority (CMA) is consulting on whether to launch a market investigation into Motorola Solutions’ Airwave network, which is currently used by all emergency services in the U.K.

The move follows concerns expressed about the impact of the dual role of Motorola as the owner of the company providing the current mobile radio network in Airwave Solutions and as a key supplier in the rollout of the planned Emergency Services Network (ESN), which is intended to take the place of the Airwave network.

The U.K. government, the National Audit Office and the Public Accounts Committee have expressed concerns regarding Motorola’s position and incentives to deliver ESN, given the continuing high profitability of the Airwave network. The CMA said it is particularly concerned that Motorola could stand to make excess profits of about 1.2 billion pounds in the period from 2020 to 2026. This issue has arisen because the planned replacement of the Airwave network with ESN has been delayed from 2019 to the end of 2026.

The CMA’s initial review of the evidence available indicates that the supply of the Airwave network in Great Britain is not working well, resulting in significant detriment to customers and the taxpayer. Given the nature and significance of the issues the CMA has identified, it has initially determined that further investigation is needed.

“At the moment, Motorola is the only provider of critical mobile radio network services used by our emergency service workers and is involved in both the current and future setup,” said CMA Chief Executive Andrea Coscelli. “We’re worried that the company could be cashing in on its position, while taxpayers are left to foot the bill. The CMA is minded to launch a market investigation to dig deeper into its concerns and will now consult with a range of stakeholders, including the Government, on its plans.”

Motorola purchased Airwave in February 2016, two months after it entered into a contract with the U.K. government to provide software for the ESN. The CMA cleared the acquisition at that time, in part because of its expectation that the Airwave network would be shut down by 2019, it said.

While the probe is still in early stages, the CMA has identified two potential solutions in its consultation that may, in principle, be available should a market investigation confirm its initial concerns: regulate Motorola’s rate of return in relation to the Airwave network or require Motorola to sell the Airwave network.

The CMA is required to consult before making a market investigation reference. Following its consultation, which is open until 2 September, the CMA will decide whether to launch a market investigation.

Find more information on the consultation here.

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