Hytera sues Motorola Solutions for anticompetitive behavior, hampering access to dealers

Offering incentives to dealers or channel partners is commonplace in the LMR industry and many other business sectors, and Hytera does not object to normal incentive offerings, Jordan said. But some of the measures taken by Motorola Solutions are anticompetitive, he said.

“I don’t see anything wrong with incentives at all, and I think incentives are healthy,” Jordan said. “We all love healthy competition—I want it. We all want to compete on a fair playing field.

“What isn’t healthy is—outside of incentives—the pressure to discontinue the support, sales, marketing and representation in any way of a product that they should be free to sell. It’s the pressure from a private manufacturer to tell a private business what they should and shouldn’t sell in order to receive continued incentives. That’s where I think the break is. That, to me, is the complaint.”

Specifically, the Hytera lawsuit contends that Motorola Solutions uses a “carrot and stick” approach to persuade dealers to sell Motorola Solutions offerings exclusively.

On the “carrot” side, Motorola Solutions’ “Partner Empower Program” rewards dealers with additional rebates and greater access to marketing funds based on a point system that is much easier to achieve if the dealer only sells Motorola Solutions products, according to the Hytera complaint.

In addition, Motorola Solution—often referenced in the lawsuit by the company’s stock symbol, “MSI” —uses a “stick” to convince dealers to opt for exclusivity, the Hytera lawsuit states.

“The ‘stick’ in MSI’s de facto exclusivity scheme is its threat to punish, including by way of termination any independent dealer that seeks to offer competitive products, i.e., act as an independent dealer,” according to the lawsuit.

Such tactics were utilized during the Motorola Solutions Channel Partner Expo that was conducted in conjunction with IWCE 2017 in March, according to the Hytera complaint. The event was conducted shortly after Motorola Solutions filed its initial lawsuit against Hytera, claiming patent infringement and stolen trade secrets.

”This dealer-only meeting was notable for many people because of its focus on Hytera,” the Hytera litigation states. “MSI CEO Greg Brown gave a speech to dealers from across the country indicating that MSI was upset about the competition from Hytera in the United States. These official comments and other MSI statements were orchestrated at IWCE and later with the goal of threatening the cancellation of dealerships for selling competing Hytera product lines. This was understood in the industry to be a threat to coerce independent dealers into de facto exclusivity with MSI.”

Hytera’s lawsuit alleges that these threats were not only conveyed verbally.

“On information and belief, MSI sent in the summer of 2017 a written memorandum to dealers in the United States threatening dealers with termination of their dealership with MSI, if they carry competing Hytera product lines,” the Hytera lawsuit states.

“By means of these letters, threats, and the resulting dealer fear induced by this conduct, MSI hopes to enforce a de facto scheme of exclusive dealerships within the relevant markets.”