Phones 4U’s £1 billion claim was rejected after a 9 week-long trial.

17 Nov 2023, 34 mins ago

Phones 4U was a mobile phone connection provider that used the mobile connections of the larger providers who operated the connection networks.

The relationship was governed by separate agreements between Phones 4U and the individual operators. Phones 4U, which went into administration in September 2014, blamed its collapse on anti-competitive collusion between EE Ltd (“EE”), Vodaphone Ltd (“Vodaphone”) and Telefonica UK Ltd (“O2”) that were the individual operators.

Phones 4U alleged that EE, Vodaphone, and O2 had, through bilateral and multilateral arrangements, agreed that they would all not extend or renew their agreement with Phones 4U, and that said decision was not made independently but with specific regard to future communication strategy or commitments that they had made to each other.

Phones 4U further alleged that, and only in relation to its agreement with EE, that EE’s decision not to renew the agreement was a breach of EE’s obligation of good faith.

After hearing 41 factual witnesses and 4 experts, the court rejected all of Phones 4U’s claims. The court held that, although the CEO of O2 did approach the CEO of EE in 2012 regarding its intention to reduce its reliance in sales on Phones 4U, EE did not respond positively. Accordingly, this could not be a breach of UK or EU competition law (as the events occurred before Brexit).

The court further held, in relation to the breach of contract claim, that there was no general duty of good faith in the agreement between Phones 4U and EE, and even if there was such a duty, EE did not breach the duty by sending a letter informing Phones 4U of its intention on 12 September 2014 (even though EE knew that the effect of this would be the likely collapse of Phone 4U).

The court was critical of the senior executives of EE, Vodaphone, and O2 for failing to stick to their own corporate guidance when meeting with competitors, as they frequently did not set out in advance what topics would be discussed in the meetings or make a note after these meetings of what had been discussed. The court took witnesses words for the fact that senior executives “know what we can and cannot discuss with competitors”, and although their attitude was described as “mistaken and regrettable”, it was not deemed unlawful. This may lead us to consider that so long as it is not lawfully required to record that no unlawful acts have been committed in meetings between competitors, can collusion and anti-competitive behaviours continue behind closed doors?

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