GovWire

The CMA has published its draft order for consultation.

1. On 05 April 2023, the Competition and Markets Authority (CMA) published its report under section 136 of the Enterprise Act 2002 (the Act) entitled Mobile Network Services Market Investigation: Final Report (the Report).

2. The Report set out the CMAs decision that features of the market for the supply of communications network services for public safety and ancillary services in Great Britain, individually or in combination, prevent, restrict or distort competition in connection with the supply of Land Mobile Radio network services for public safety in Great Britain and there is an adverse effect on competition (AEC).

3. The AEC gives Airwave Solutions (and its owner, Motorola Solutions) the ability to price services above levels the CMA would expect to prevail in a competitive market and results in a detrimental effect on customers.

4. The CMA estimates that, as a result of the AEC, Airwave Solutions and Motorola Solutions can be expected to make total supernormal profits of around 1.27 billion from the operation of the Airwave Network between 1January 2020 and 31 December 2029. This is equivalent to charging almost 200 million per year more than the CMA would expect in a well-functioning market.

5. The Report sets out the CMAs decision to make an order under section 161 of the Act for the purpose of remedying, mitigating or preventing the detrimental effect on customers so far as it has resulted from, or may be expected to result from, the AEC.

6. The Order, which is published in draft form for consultation, would impose a charge control, limiting the charges Airwave Solutions and Motorola Solutions may make for services within the scope of the charge control by more than 40%. It will, nonetheless, give Airwave Solutions and Motorola Solutions the opportunity to recover their reasonable costs of providing the services and to earn a reasonable level of profit in doing so, ie the level of profit that would be expected in a well-functioning market.

7. Airwave Solutions and Motorola Solutions will be required to provide information concerning compliance with the charge control and the evolution of their capital expenditure plans and projected spend over time to the Home Office and to the CMA. Airwave Solutions and Motorola Solutions will also have an obligation to respond fully, accurately and within specific time limits to reasonable requests from the Home Office and / or the CMA for further clarification and substantiation of the information they provide.

8. The CMA is inviting representations on the Draft Order, which must reach the CMA by 11.59pm on 16 June 2023.

More information about this investigation can be found on the mobile radio network services case page.