Global LMR Communications Provider Hytera Sues Motorola Solutions Under Sherman Antitrust Act Alleging Anticompetitive Practices That Force US Customers to Pay a Surcharge for Safety
Business Wire India
Hytera Communications Corporation Ltd. today filed suit in federal district court in New Jersey against Chicago, Ill.-based Motorola Solutions, Inc., alleging that Motorola Solutions is engaging in anticompetitive practices that are unlawful under the Sherman and Clayton Acts by deliberately and actively foreclosing competition in land mobile radio (LMR) communications systems, in order to reap billions of dollars on sales at inflated prices to US customers.
Hytera's complaint alleges that Motorola Solutions prevents Hytera from competing in the US marketplace with its critical communications products that offer best-in-class features and far better value to public safety organizations, municipal governments, businesses, and taxpayers. Hytera further alleges that Motorola Solutions maintains its monopoly and enforces its inflated prices in the US by engaging in a monopolistic scheme that includes forcing LMR dealers to drop Hytera's products, leveraging its dominance of the US public safety market to impede adoption of newer, less expensive technologies here in the US, and engaging in a serial pattern of sham litigation to impede Hytera and interfere with its relationships with dealers and customers.
“Motorola Solutions is forcing US customers to pay artificially high prices for critical communications. It can do this because of its long-standing monopoly,” notes Tom Wineland, Director of Sales for Hytera Communications America (West), Inc. “Motorola Solutions is doing this as security risks in the US are increasing, with a growing need for mission-critical communications solutions that help organizations to protect important utilities, provide safety and services for public transportation systems, and respond to threats at events such as concerts, festivals, and sports events, even in our nation's schools. All these demands put pressure on organizational budgets, and in turn are costing taxpayers and the American public.”
Shenzhen-based Hytera, Jersey City, N.J.-based PowerTrunk, Inc., Miramar, Fla.-based Hytera America, Inc., Irvine, Calif.-based Hytera Communications America (West), Inc., and Cambridge, UK-based Sepura PLC together allege that by foreclosing competition from Hytera’s DMR and TETRA solutions, Motorola Solutions is able to maintain inflated pricing in the US on its P25-compliant products. P25 is a technology standard for public safety LMR in the US. TETRA, used by public safety organizations and commercial businesses worldwide, offers similar functionality and features to P25 equipment and can be significantly less expensive, making it a compelling option for utilities and transportation organizations and other commercial users in the US. Hytera’s complaint provides the example of two competing professional DMR handsets with similar features and functionality: Motorola Solutions’ suggested retail price (MSRP) is as much as $738, nearly twice Hytera’s MSRP of $440.
Hytera further alleges that Motorola Solutions is charging US customers more than it charges customers in competitive markets outside the US. Hytera gives an example that, even after Motorola applied discounts to its list price, it charged the City of Chandler, Ariz., $5,290 for a P25-compliant radio — nearly five times what a customer in the UK could pay at retail for a comparable TETRA product. Hytera explains that US customers and American taxpayers could realize significant savings from competition from more cost-effective TETRA and DMR solutions that are just as robust.
“The only thing this pricing adds up to is more profit for Motorola Solutions — with taxpayers on the hook,” Wineland says. “Customers want a choice, as reflected by the demand by public safety customers and other US customers for DMR, a robust LMR alternative at a fraction of the cost of P25.”
Hytera points out that Motorola Solutions has built a moat around the US public safety market, making continuous efforts to stall acceptance in the US of TETRA-compliant LMR. Hytera also notes that Motorola Solutions has engaged in a pattern of intimidation of LMR dealers. “Motorola Solutions brow-beats dealers into dropping Hytera's products or face losing the ability to sell Motorola Solutions' products and service lucrative maintenance contracts,” notes Andrew Yuan, Hytera's President of North and South America, based in Irvine, Calif.
“Hytera provides feature-rich, high-quality solutions at a competitive price. Motorola Solutions is a monopolist charging US businesses a surcharge for safety, and those costs are passed on to taxpayers and the general public,” adds Mark Jordan, Regional Sales Manager for Hytera Communications America (West). “Motorola Solutions is badgering dealers to drop Hytera, preventing adoption of standards that would lower prices for customers, and using courts to damage Hytera's relationships with LMR dealers and customers and raise our cost of doing business.”
Hytera details how Motorola Solutions has engaged in a pattern of sham litigation and regulatory actions to raise costs for Hytera and sow anxiety in the market, diminishing competition. This includes suing Hytera for patent infringement on a set of standard essential technologies that industry users have agreed to license on fair, reasonable, and non-discriminatory (FRAND) terms, and for which Hytera has already been paying Motorola Solutions to license.
“Customers in the US deserve the best critical communications equipment and technology at the best prices,” adds Wineland. “Customers love Hytera's products—and the value they receive. American customers are paying far more to Motorola Solutions and getting less, and Motorola Solutions is working hard to maintain that unfair pricing regime here.”
Hytera Communications Corp., Ltd., et al. v. Motorola Solutions, Inc., 2:17-cv-12445 (D.N.J.) alleges that Motorola Solutions has violated federal and state antitrust law by violating Sections 1 and 2 of the Sherman Antitrust Act and Section 3 of the Clayton Act, and the unfair competition and intentional interference laws of the states of New Jersey, California and Florida. Hytera is seeking damages and injunctive relief.
Hytera is represented by Noah Brumfield, Jason Zakia, Yi Ying, and Jeremy K. Ostrander of White & Case LLP and by Liza M. Walsh, Tricia B. O’Reilly, Marc D. Haefner, Katherine Romano, and Katelyn O’Reilly of Walsh Pizzi O'Reilly Falanga LLP.
Hytera Communications Corporation Limited is a leading global provider of innovative professional land mobile radio (LMR) communications solutions to governmental organizations, public security institutions, and customers from other industries including transportation, oil and gas, and many others around the world. Founded in Shenzhen, China in 1993 and listed on the Shenzhen Stock Exchange (002583.SZ), Hytera has ten research and development centers around the world and has partnered with companies in the U.S. since 2000. Hytera established its first U.S. subsidiary, Hytera America, Inc., in 2004. It established Hytera Communications America (West), Inc., in 2016. Hytera owns PowerTrunk, Inc., and Sepura LLC, and has research and servicing facilities in Schaumburg, Ill. More information is at www.hytera.com.