The UK’s biggest mobile network operators breached antitrust law and unlawfully “colluded” with each other to participate in the “destruction” of retailer Phones 4U, which went into administration in 2014, it was claimed in the High Court.
The administrators of Phones 4U (P4U) have brought a High Court lawsuit against five mobile network operators — EE, Deutsche Telekom, Orange, Vodafone and Telefónica — which started on Monday.
P4U alleges a wide-ranging conspiracy in which executives at different companies colluded to put it out of business. It claims that decisions by all the mobile operators to pull out of supplying the chain in September 2014 were the result of unlawful co-ordination between them rather than independent decision-making.
The mobile operators strongly deny the allegations and are defending the case.
Kenneth MacLean QC, representing P4U, claimed on Monday that all the mobile network operators (MNOs) had a “massive incentive” to reduce volumes of business done through P4U because of low profit margins in the UK market.
“But they could not achieve these goals unilaterally. It would only happen if the MNOs co-operated. And that was unlawful,” he said in his written arguments, adding that “senior executives appear to have been relaxed about contemplating or participating in breaches of competition law”.
MacLean claimed that there was a “culture of collusion” and “conversations between senior executives took place safe in the knowledge they would not be reported to the authorities,” he said.
“Unsurprisingly, in an industry riddled with inappropriate and unlawful behaviour, there were multiple contacts at different times between MNO personnel at different levels,” he said and claimed that the defendants had made “significant efforts to obscure, have failed to preserve, or have destroyed, relevant material”.
In his written arguments MacLean noted one “astonishing exchange” in April 2014, where an Orange executive sent a text message to a Vodafone manager seeking to arrange a “secured call with both of us using a new prepaid number [that is, a so-called burner phone]”. The Vodafone executive said he was “not comfortable” with this arrangement and there is no suggestion that such a conversation took place.
Deutsche Telekom said in its written arguments to the trial that P4U’s case was “simply hopeless” and there was “no direct evidence that DT engaged in any collusive contacts with other undertakings”. DT added the claim was “opportunistic” and claimed P4U was seeking “to shift the blame for its demise” on to the mobile operators “when the simple fact is that P4U was bled dry by its private equity owners”.
Mark Hoskins QC, acting for Spain’s Telefónica, claimed in written arguments to the trial that the evidence in the case showed there had been no collusion and that the case should be rejected.
Orange has denied the allegations that it participated in collusive or anti-competitive conduct or committed or procured any breach of contract. “Orange will continue to vigorously defend itself against the allegations which P4U has made,” it said in a statement.
EE said in its written arguments to the trial that P4U’s claim was “without merit” and the evidence shows EE’s decision to exit P4U “was not part of a conspiracy. It was a unilateral decision which made good business sense.”
Vodafone claimed in written arguments to the trial that there was “no evidence to support the allegation that Vodafone colluded with any other defendant.” The trial, which is due to last for three months, continues.