Airwave Solutions Limited & Ors v Competition and Markets Authority & Anor

In a market investigation concerning a long-term public-service contract, the fact that a future replacement service falls within the same product market does not establish that it materially constrains the incumbent. Market definition and competitive assessment remain distinct; the regulator must examine evidence of actual constraint in the relevant negotiations. For an extension after a fixed term, the original contract price is not necessarily a comparator. Where the supplier was expected to recover its investment and a reasonable return during the initial term, a well-functioning-market benchmark may treat existing assets as fully amortised and avoid charging customers twice. Contractual terms remain relevant but do not prevent statutory intervention to remedy an adverse effect on competition. Appellate review of complex economic assessments permits close scrutiny while respecting the expert decision-maker’s margin of appreciation.

The Competition and Markets Authority investigated the pricing and profitability of communications network services supplied under a long-term PFI agreement for emergency services. It found an adverse effect on competition under the Enterprise Act 2002 and imposed a charge control for the extension period.

Motorola sought judicial review under section 179. The Competition Appeal Tribunal upheld the CMA’s decision in [2023] CAT 76 and later refused permission to appeal in [2024] CAT 7. Motorola applied to the Court of Appeal for permission, with the substantive appeal to follow if permission were granted. The proposed grounds concerned the treatment of long-term dynamic competition from a replacement network and the valuation of existing network assets during the extension period.

The Court of Appeal refused permission to appeal. Lord Justice Green gave the leading judgment, with Lord Justice Lewison and the Chancellor of the High Court agreeing.

1. Judicial review approach. The Competition Appeal Tribunal may closely scrutinise the facts while allowing the decision-maker an appropriate margin of appreciation. The extent of deference depends on the challenge. Little deference is required on contractual or legal interpretation, whereas appropriate deference is required when complex economic evidence is balanced and evaluated. The approach was consistent with Office of Fair Trading v IBA Healthcare [2004] EWCA 142, as analysed in Cerelia Group Holding SAS v CMA [2024] EWCA Civ 352, and with the caution identified in Société Coopérative de Production SeaFrance SA v CMA [2015] UKSC 75.
2. Ground I. The definition of a market does not mechanically determine the outcome of the competitive assessment. Competitors may fall within the same market without materially constraining one another. The CMA’s discussion of dynamic competition in its market-definition analysis identified potential competition, not an actual material constraint. It was entitled to examine the separate extension negotiations and conclude from the contemporaneous evidence that the replacement network did not materially constrain Motorola. The issue had therefore not been ignored.
3. Ground II. The CMA was entitled to find that uncertainty and ineffectiveness in the contractual asset-transfer provisions contributed to the adverse effect on competition. The initial fixed term was designed to allow recovery of the supplier’s investment and a reasonable return. The position after expiry was materially different. In a well-functioning market, pricing during the extension could therefore exclude further remuneration for already amortised assets, avoiding customers paying twice for the same investment. A replacement-cost or modern-equivalent-asset valuation was not required.
4. The valuation was not irrationally based on scrap value. The assets retained value to the Home Office because they continued to provide an essential service, but had little material value to a third-party purchaser. Contractual provisions were relevant but not dispositive: remedial powers under the Enterprise Act 2002 could override the contract. Neither proposed ground had a realistic prospect of success.

1. Court of Appeal (Civil Division): Permission to appeal refused; the proposed substantive appeal was not entertained. [2025] EWCA Civ 54.
2. Competition Appeal Tribunal: Judicial review of the CMA’s decision dismissed and the decision upheld. Permission to appeal was subsequently refused. [2023] CAT 76; [2024] CAT 7.