Motorola hits out at UK competition watchdog over Airwave investigation

[ad_1]

Motorola Solutions has hit out at the UK competition watchdog after it opened an investigation into the US company’s lucrative contract to provide communications services for emergency services workers.

The Competition and Markets Authority on Monday launched an in-depth investigation into Motorola’s dual role as a key supplier to the new Emergency Services Network that will support the country’s police, ambulance and fire fighting staff as well as the owner of Airwave, the older system used by emergency services.

Delays to the launch of the ESN — partly because of technical issues with Motorola’s technology, among other factors — has meant that the older Airwave network has turned into a cash cow for the company. The CMA estimates Motorola could stand to make “excess profits” of up to £1.2bn between 2020 and 2026.

Andrea Coscelli, chief executive of the CMA, said: “As the sole provider of critical mobile radio network services used by our emergency services, we’re concerned that Motorola could be cashing in on its position, leaving taxpayers to cover the cost.”

The investigation was instigated by the Home Office which wrote to the CMA in April to express its concerns about Airwave’s profits and how they could affect Motorola’s work on the ESN. 

The CMA, which first expressed concerns in July, will investigate whether Motorola has had an incentive to delay the launch of the ESN. The body added it will also review whether the Home Office was left in a “weak bargaining position” because of a concern that insufficient information was provided to the government by the company about the costs of running and maintaining Airwave.

Motorola hit out at the investigation, which comes against a backdrop of talks with the Home Office about an extension of its Airwave contract out to 2026.

“We strongly believe this market investigation is not warranted,” the company said. “We reject the assertion that we have an incentive to delay the implementation of the ESN.”

Motorola bought Airwave — which was originally due to close in 2019 — for £817m in 2016, months after it was appointed as one of the prime suppliers to the ESN. It has since invested in the maintenance and management of the older network, provided annual audited financial statements and expenditure forecasts to the Home Office and reduced prices, it said.

The CMA has appointed an independent group to investigate the sector and determine if there are issues. If it concludes there are problems in the market, it could force the sale of Airwave.

Motorola sounded a warning that the CMA investigation could harm the UK’s ability to sign long-term deals with suppliers if the terms of the Airwave deal are retrospectively changed.

“This is a contractual matter between the Home Office and Motorola Solutions and this investigation threatens the principles of long-term government contracting in the UK,” it said.

[ad_2]

Source link