Phones 4u Judgment Published

Posted on Nov 20, 2023. by NTI

You may remember that back in September 2014, Phones 4u Ltd went into Administration, having being one of the two main independent suppliers of consumer connections to mobile phone networks in the UK at that time.


When it went into Administration, it had had over 700 retail outlets in the UK, and around 5,600 employees.


The Administrators brought action against EE, which was formed in 2010 as a joint venture between Orange and T-Mobile (Deutsche Telekom), claiming that the network(s) had colluded in anti-competitive action and that this had resulted in Phones 4u going into Administration.


Phones 4u’s Administrators had also claimed that its collapse had been caused by a breach of contract by EE, and tort claims were brought against Deutsche Telekom and Orange for procuring or inducing that breach to cause damage by unlawful means.


The court considered whether the defendants had breached the Competition Act 1998 and the Treaty on the Functioning of the European Union, which was in force at the time.


It was established that a concerted practice involved three elements:

  • two or more undertakings concerting together
  • conduct on the market pursuant to those collusive practices
  • a relationship of cause and effect between the two


Consideration was given to, among other things, a discussion between the CEOs of O2 and EE at a lunch in 2012.


The court did not consider that the first element necessary to constitute a concerted practice was present.


The court also considered whether there had been infringement between O2 and Vodafone in 2012, and it was found that there was a “wholly insufficient basis… to support such a finding on the balance of probabilities”.


Finally, the court considered whether EE had been in breach of an agreement they had had with Phones 4u, following a letter being sent on 12 September 2014, which informed Phones 4u that it would not be seeking to extend or renew the agreement. The allegation was that the letter had caused Phones 4u to go into Administration, and to allow EE to terminate the agreement and avoid them having to make further revenue share payments to Phones 4u.


The court found that on the ‘true construction’ of the contract, no general duty of good faith was to be implied. It also found that even if the court was wrong on that, there had been no breach of good faith by EE. This meant that because there had been found to be no such breach, the claims in tort against Deutsche Telekom and Orange for inducing a breach of contract by EE and for unlawful means conspiracy fell away.

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