High Court Rejects Phones 4u Appeal in Damages Claim vs O2, EE and Vodafone UK UPDATE
The long-running saga of former high street mobile phone retailed Phones 4u (P4u), which fell into administration in 2014 and claimed that key mobile operators (e.g. O2, EE and Vodafone) had colluded to drive them out of business, may have finally come to an end after the Court of Appeal in London dismissed each ground of the case.
In case anybody has forgotten. O2 decided not to renew their new connections contract with P4u in October 2012 and a year later this was extended to include their upgrades and SIM-only contract. On 7th August 2014 Vodafone UK gave written notice to P4u terminating its contract with effect from February 2015, and in September 2014 EE informed P4u by letter that it would not renew its agreement when it expired in 2015 either. P4U went into administration three days later.
The retailer later alleged that the mobile operators had colluded to drive them out of business and initially lodge a £1bn damages claim. But the judge in a prior appeal found that all of the mobile operators had their own reasons for wanting to exit their respective agreements with P4u, which did not amount to significant collusion or anti-competitive behaviour.
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The Court of Appeal has today dismissed the latest attempt by P4u to reverse the earlier ruling (here). “In conclusion, I would dismiss each ground of appeal. The judge made no material error of law and, in respect of challenges based on delay or compartmentalisation, I am satisfied that the judgment is safe,” said the ruling.
A spokesperson for EE told ISPreview:
“We have always maintained that EE’s decision to exit Phones 4U was taken independently and based on sound business reasoning. The High Court judgment handed down in November 2023 vindicates that position, dismissing all the allegations made in the administrators’ claim, and this has now been upheld by the Court of Appeal.
Our code of business sets out how we compete to win fairly and connect for good, guiding our focus on delivering a personal and brilliant service to our customers.”
P4u is now considering its next steps, but the latest judgment doesn’t seem to leave them with many viable options.
UPDATE 4:21pm
We’ve added a comment from EE (BT) above.
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Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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Umm, I for one who has a interest in The phones 4u case think this is a mistake.
The law suggests otherwise. This always looked like an act of desperation on the part of the administrators to get some money back for the creditors. Phone4u were never owed a living by the network operators. Once the operators decided there was a more profitable business model, bypassing P4U, they were perfectly entitled to pursue it, providing of course they exited their contracts legally.
Having read the judgements (all three of them), I’m interested to know why you think this is a mistake.
The original judgement, and the appeals court judgement, are clear that O2, EE and Vodafone all provided sufficient evidence to show that they did not collude to drive P4U out of business. Instead, they showed that they had each come to the conclusion that, for different reasons, the terms that P4U wanted from them were commercially unviable.
Unless you have evidence that P4U did not present showing collusion, the judgement is correct; it comes down to the business environment changing such that the deals P4U needed to survive were not economically viable for the networks. That’s not something P4U deserves compensation for; it had a business model that was no longer sustainable.
P4u we’re hated by the operators due to the constant bad selling techniques used by them and cpw. Its all a big scam anyway
Mobfanot, that’s a sweeping generalisation on both p4u and cpw with your allegations of misselling and hatred by the networks. The Independents were useful until they were not. Simple as that.
They provided huge volume for the networks but also admittedly churn but were essential at the time
The mobile market is poorer with not having any independents on the high street. For the average Joe the prices have risen and there is no one to keep the networks honest anymore
The Independents absolutely served a purpose until they didn’t
The business model was not sustainable at all but your allegations of misselling I believe are way too harsh
To be honest Jim, CPW is well known to missell and pressure sell – look at their history with regulators and fines, Currys included. They cause churn because they get more commission for new connections, not because it’s the best thing for the customer. They missell additional lines – I’m sure you’ve hear the term “free tablet” used before – except it’s free upfront cost, they try and hide that there’s a monthly cost.
I’ve even had personal experience of one guy trying to sell me a “phone and tablet combo deal” where they’d discounted the phone to cover the cost of the tablet but failed to tell me I could’ve had the discount either way! Dishonest and scummy practices.
We may pay more to go direct but the likelihood of being taken advantage of is much lower. That and you can use companies like mobiles.co.uk and NOT have the slimy sales experience.
The three MNOs didn’t like the hard-sell approach of Phones 4u, not to mention its demands such as higher commissions and upfront payments for phone contracts at a time when MNOs were spending a fortune in building out their 4G networks. So, the MNOs had no problem in dumping Phones 4u but kept Carphone Warehouse which was regarded as a much better trading partner, and retained this relationship with Dixons Carphone (which resulted from the merger of Dixons and Carphone Warehouse).