No appeal for Phones 4U in mobile giant collusion case

Overview

The High Court has denied a bid by the joint administrators of Phones 4U to appeal an earlier decision rejecting the company’s claims against the likes of telecom giants including EE, O2, and Vodaphone, rebuffing any insinuation that the Court misapprehended the evidence. The Court found that its conclusions were factual evaluations within established principles of law which were very unlikely to be overturned on appeal.

Background

The claims alleged that the companies colluded to withdraw their business from Phones 4U, ultimately causing the company’s administration. In November, the High Court ruled in favour of the mobile companies, finding that their decisions were reached independently and without any collusion or unlawful exchange of information.

The Court’s Decision

The joint administrators sought permission to appeal, pointing to various pieces of evidence which they said the Court did not properly assess. The main point of contention was a September 2012 lunch meeting at the Landmark Hotel between the then CEO of O2 and the then CEO of EE.  The joint administrators alleged that O2 disclosed commercially sensitive information to EE, and that O2 obtained comfort from EE’s passive acceptance that EE would not take up volumes from Phones 4U that would become available if O2 withdrew.

The Court rejected this ground of appeal. It accepted that an exchange of information does not have to be reciprocal to give rise to an infringement. However, on the facts, the Court concluded that O2’s disclosure was wholly vague and incapable of removing or reducing uncertainty and facilitating practical cooperation. EE’s CEO remained passive during the other’s vague disclosure of what O2 had in mind and said nothing that would encourage O2. This was a factual evaluation and the Court did not consider that there was any real prospect of the Court of Appeal finding that it was erroneous.

The joint administrators also pointed to an email which they alleged showed EE had known about Vodaphone’s plans to pull out of Phones 4U much earlier than EE had admitted, and suggested this meant that EE was influenced by these plans to itself withdraw. The Court rejected this inference, finding that, as a matter of fact, insofar as some people at EE gained this information, it had no effect on EE’s decision to leave Phones 4U.

One more interesting aspect of the judgment were the Court’s comments with respect to the delay in delivering the judgment. The Court acknowledged that the judgment was “very delayed”, but pointed out that the complexity of the matter (alleged collusion is generally the subject of an investigation by a competition authority leading to a lengthy decision prepared by a team of officials) and the volume of documents filed to explain the delay.

The Court also then made clear that delay in production of a judgment is not in itself a ground of appeal, but simply means that factual findings in the judgment may be subject to more intensive scrutiny by the appellate court. After scrutinizing the factual findings that were challenged by the joint administrators, the Court found that none of these grounds of appeal had any real chance of success and refused to grant permission to appeal.

Judge: Mr Justice Roth

Counsel:

• Meredith Pickford KC of Monckton Chambers, Laura John KC of Fountain Court Chambers, David Gregory of Monckton Chambers and Daniel Schwennicke of Fountain Court Chambers (instructed by Clifford Chance) for EE Limited

• Mark Hoskins KC, Sarah Abram KC, Matthew Kennedy and Aarushi Sahore of Brick Court Chambers (instructed by Mishcon de Reya and Linklaters) for Telefonica UK Limited, Telefonica, S.A. and Telefonica O2 Holdings Limited

• Robert O'Donoghue KC and Hugo Leith of Brick Court Chambers (instructed by Covington & Burling) for the Deutsche Telekom AG

• Marie Demetriou KC, David Scannell KC and David Heaton of Brick Court Chambers (instructed by Norton Rose Fulbright) for Orange SA

• Ewan McQuater KC of 3 Verulam Buildings, Rob Williams KC of Monckton Chambers, Adam Kramer KC  of 3 Verulam Buildings and Hannah Glover of 3 Verulam Buildings (instructed by Hogan Lovells) for Vodafone Limited and Vodafone Group Public Limited Company

• Kenneth MacLean KC, Owain Draper, Gideon Cohen and Stephanie Wood of One Essex Court (instructed by Quinn Emanuel Urquhart & Sullivan) for Phones 4U Limited (In Administration)