CMA wins appeal in emergency services case
The Court of Appeal has refused Motorola permission to appeal the CMA鈥檚 findings that it was making supernormal profits from providing communications network services to the UK emergency services.
Today the Court of Appeal (CoA) has unanimously dismissed Motorola鈥檚 application for permission to appeal on both of its pleaded grounds, in which it claimed that the Competition and Markets Authority (CMA) had made errors in assessing competition in the relevant market and the profitability of the Airwave Network in 2021.聽
In its original findings, the CMA said that Motorola was able to make supernormal profits because it has a virtually unconstrained monopoly in the market to supply communications network services to the UK鈥檚 emergency services. The CMA imposed a charge control order capping the price Motorola could charge.
Motorola challenged the CMA鈥檚 original findings in the Competition Appeal Tribunal (CAT). The CAT unanimously dismissed that challenge and Motorola sought permission to appeal to the CoA. In a judgment handed down today, the Court endorsed the CMA鈥檚 reasoning as set out in its original findings. 聽
The CMA鈥檚 price cap ensures that the UK鈥檚 emergency services pay a fair price for Airwave鈥檚 services, reducing the price by almost 拢200 million per year.
Today鈥檚 decision by the CoA brings this case to a close, as Motorola cannot appeal the decision further.
George Lusty, Executive Director of Consumer Protection and Markets, at the CMA, said:
The CMA鈥檚 investigations and legal decisions are carefully considered and evidence-led and we welcome today鈥檚 decision by the Court of Appeal which endorses our reasoning in this case. 聽
Our investigation showed that Motorola had been charging emergency services in the UK 拢200 million a year more than they would if the market was working well. The Court鈥檚 judgment today means that our price cap remains in place, which limits how much Motorola can charge emergency services for using its Airwave Network.
Today鈥檚 decision brings this matter to a close.
For more information, visit the聽Mobile radio network services聽inquiry page.聽
Notes to Editors:
- In October 2021, the CMA opened an investigation into mobile radio network services amid concerns that the market might not be working well. The investigation 鈥� conducted by an independent panel 鈥� confirmed these concerns, finding that UK emergency services had no choice but to continue using Motorola鈥檚 Airwave Network, due to a lack of alternative providers. As such, Motorola was able to earn supernormal profits from the prices it charged the Home Office 鈥� which negotiates contracts on behalf of emergency services 鈥� resulting in higher costs to the emergency services which are ultimately footed by the taxpayers.
- To reduce these costs, the CMA imposed a charge control order, by way of a price cap, in July 2023, which brought the price down to the level that would be expected in a well-functioning and competitive market 鈥� putting an end to the estimated 拢200 million per year of over-charging.
- While protecting taxpayers, the price cap allows Motorola to continue to invest in the Airwave Network and so ensure that quality and safety are maintained.
- Motorola disagreed with the CMA鈥檚 findings 鈥� specifically that the price of the Airwave Network services was not limited by competition and on the level of profit they make from the Airwave Network 鈥� and so challenged them at the CAT. Following a hearing in August 2023, the CAT unanimously dismissed both of Motorola鈥檚 grounds of challenge.
- Thereafter, Motorola sought permission to appeal that judgment and today the CoA unanimously dismissed both grounds of Motorola鈥檚 application for permission to appeal the CAT decision, which had upheld the CMA鈥檚 findings.
- Supernormal profits mean profits over and above what would be expected in a well-functioning market. The CMA鈥檚 total estimate of the supernormal profits Motorola will make over the 2020 to 2029 period is 拢1.27bn. That estimate reflects the net present value of Motorola鈥檚 expected returns at the start of that period. This is equivalent, on an undiscounted basis, to revenues being almost 拢200m per year above the level that would be required for it and Airwave Solutions to earn a reasonable return.
- For media enquiries, contact the CMA press office on 020 3738 6460 or press@cma.gov.uk.