Competition Act investigation regarding the provision of equipment and related services in the electronic communication sector

Following our investigation, Ofcom has today issued Sepura and Motorola with a decision finding that on 5 September 2018, they breached UK competition law by exchanging competitively sensitive information. This information exchange related to a procurement exercise run by what was known at the time as the Police ICT Company (“PICT”) but is now known as the Police Digital Service.

Due to a delay in the roll-out of the new 4G Emergency Services Network, TETRA devices, accessories and services (based on terrestrial trunked radio standards and run on the Airwave network in Great Britain), are required for longer than had been anticipated. This led to PICT running a procurement exercise for the specialist equipment and related services.

Ofcom has concluded that as a result of this exchange of messages on 5 September 2018, the Parties infringed the Chapter I prohibition by participating in a concerted practice that 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.

Motorola USA has been granted immunity under the CMA’s leniency policy and, provided it continues to comply with the conditions of leniency, neither Motorola USA nor Motorola will be subject to a financial penalty. Ofcom has imposed a financial penalty of £1.5m on Sepura.

Ofcom will make available a public version of the infringement as soon as possible.

Ofcom has today issued a Statement of Objections to Motorola Solutions UK Limited (“Motorola”), its ultimate parent company Motorola Solutions Inc., and Sepura Limited (“Sepura”), collectively referred to as the “Parties”.

The Statement of Objections sets out Ofcom’s provisional view that the Parties infringed Chapter 1 of the Competition Act 1998 and Article 101 of the Treaty of the Functioning of the European Union  by exchanging competitively sensitive information relating to future pricing intentions in connection with a procurement exercise run by the Police ICT company in 2018.

Specifically, the Statement of Objections alleges that Motorola and Sepura participated in a concerted practice that had the object of preventing, restricting or distorting competition in the supply of TETRA devices, accessories and related services for use on the Airwave network in Great Britain and may have affected trade within the UK and between EU Member States. The Statement of Objections states the facts on which Ofcom relies; the objections we have raised; the actions we propose to take and our reasons for proposing to take those actions. It represents one stage in Ofcom’s investigation and no assumption should be made at this stage that there has been a breach of competition law.

The Parties can now make representations to Ofcom, which will be carefully considered before Ofcom takes a final decision.

Background

Airwave is a private network in Great Britain which is used by the emergency services. It is based on terrestrial trunked radio (TETRA) standards and allows two-way radio communications between public safety users and commercial organisations. In 2014, the Home Office launched a tender to replace the Airwave network with a new network called the Emergency Services Network (“ESN”), a 4G commercial mobile LTE network. However, the roll-out of the new ESN is delayed meaning TETRA devices, accessories and related services for use the Airwave network are required for longer than had been anticipated. In 2018, the Police ICT Company ran a procurement exercise – acting as a central purchasing body on behalf of Airwave users – in order to address a forecasted shortfall in TETRA devices, accessories and related services for use on the Airwave network arising from this delay.

Ofcom has opened an investigation under the Competition Act 1998 (the “Act”) into the potential sharing of commercially sensitive information, including information on future pricing, between competitors in the provision of equipment and related services in the electronic communications sector in the UK.

Section 2 of the Act prohibits agreements and concerted practices between undertakings that have as their object or effect the prevention, restriction or distortion of competition, where this may affect trade within the UK (the “Chapter I prohibition”). Similarly, Article 101 of the Treaty on the Functioning of the European Union (the “TFEU”) prohibits agreements and concerted practices between undertakings that have as their object or effect the prevention, restriction or distortion of competition, where this may affect trade between Member States.

This investigation will examine the potential sharing of commercially sensitive information between competitors in the provision of equipment and related services in the electronic communications sector in the UK and determine whether there has been one or more infringements of the Chapter I prohibition and/or Article 101 of the TFEU.

Process

This investigation will follow the procedures set out in our published Enforcement Guidelines (PDF, 1007.1 KB). In the first phase of the investigation, Ofcom will gather further information using its powers under the Act. The analysis of this information will help inform Ofcom’s view on whether and how to proceed with the investigation.

This investigation is at an early stage and we have not reached a view on whether there has been an infringement of competition law. If Ofcom finds there is sufficient evidence of one or more infringements of competition law, we will issue a Statement of Objections to the relevant providers. We will keep this page updated with key developments as the case progresses.