Ofcom has fined Sepura £1.5m for a breach of competition law, after the company exchanged commercially sensitive information with competitor Motorola about pricing intentions during a procurement process.
The penalty is the result of an investigation into a text message exchange between senior employees of Motorola and Sepura on 5 September 2018. This exchange related to a tender process for devices and related services used by the emergency services’ communications network.
Background to the investigation
The emergency services in Great Britain use a private mobile radio network called Airwave to securely communicate in the field. The Airwave network uses ‘terrestrial trunked radio’ (TETRA) technology to provide secure and reliable two-way communications.
In 2014, the Home Office launched a tender to replace the Airwave network with a new 4G commercial mobile network, called the Emergency Services Network. Due to the rollout of this new network being delayed, it became apparent that TETRA devices and the Airwave network would be needed for longer than anticipated.
In 2018, the Police ICT Company – now known as the Police Digital Service – ran a procurement process to address a potential shortfall in TETRA devices, accessories and services. This is a highly concentrated market, where Sepura and Motorola are effectively the only two competitors.
In June 2019, Ofcom opened an investigation after Motorola came forward to the Competition and Markets Authority (CMA) with information about its contact with Sepura during this process. The CMA handed the matter over to Ofcom, as the regulator for communications services and concurrent regulator under the Competition Act 1998.
What we found
Having gathered evidence, we found that senior employees at Sepura and Motorola contacted each other on 5 September 2018 by text. This exchange covered a range of matters relevant to an upcoming tender process for devices and related services used by the emergency services’ communications network, including Sepura’s pricing strategy and likely pricing levels.
We have concluded that this exchange of messages had the object of restricting or distorting competition in the supply of TETRA devices, accessories and related services for use on the Airwave network in Great Britain, and affected trade within the UK.
Financial penalty
In light of the seriousness of the infringement, Ofcom has decided to fine Sepura £1,500,000 for breaking competition law.
Under the CMA’s leniency policy, the first company involved in certain types of anti-competitive agreement to come forward about it may receive immunity from fines, so long as the conduct is not already being investigated. Motorola has been granted immunity under this policy, which means it will not be fined.
Two senior employees of Sepura and Motorola exchanged commercially sensitive information when competing for a contract to supply communications devices to the emergency services.
This kind of behaviour is harmful to competition and this fine should act as a warning to anyone thinking of acting in this way.
Ian Strawhorne, Interim Director of Enforcement at Ofcom
Notes to editors:
- Concerted practices that have as their object the restriction or distortion of competition are prohibited by Section 2, Chapter I of the Competition Act 1998.