Phones 4U Limited (In Administration) v EE Limited & Ors

A concerted practice requires coordination between undertakings, conduct on the market pursuant to that coordination, and a causal connection between them. A unilateral disclosure of commercially sensitive information may suffice in principle, but the information must be sufficiently clear to reduce uncertainty and the surrounding circumstances must support concertation or tacit assent. Silence, body language or an ambiguous later communication will not ordinarily amount to firm and unambiguous public distancing.

Competition-law allegations remain subject to proof on the balance of probabilities. Inferences from fragmentary evidence must account for equally plausible innocent explanations. A detailed commercial contract may define the scope of any express good-faith obligation and preclude implication of a wider duty. Joint venture parents may be jointly liable where factual evidence establishes decisive influence.

The administrators of Phones 4U Limited claimed that EE, Vodafone, O2 and their parent companies had colluded unlawfully under art 101(1) TFEU and the Chapter I prohibition in s 2 of the Competition Act 1998, causing Phones 4U’s collapse. The claim concerned alleged exchanges of confidential information and coordinated decisions to reduce or terminate dealings with Phones 4U.

Phones 4U also alleged that EE breached the EE Agreement by notifying it in September 2014 that the agreement would not be renewed, and pursued tort claims against DT and Orange. The trial addressed liability, leaving causation and quantum for later determination. The central issues were whether the alleged communications constituted concerted practices, whether the decisions were independently rational, whether DT and Orange exercised decisive influence over EE, and whether EE acted in breach of contract or good faith.

1. Competition-law claims dismissed. None of the defendants infringed art 101(1) TFEU or the Chapter I prohibition. The applicable standard was the balance of probabilities. Serious allegations required careful assessment of inherent probabilities, but no heightened standard of proof applied. Fragmentary evidence could be proved by objective and consistent indicia, provided the Court considered equally plausible innocent explanations.
2. A concerted practice required concertation between at least two undertakings, subsequent conduct on the market pursuant to that concertation, and a causal relationship between the two. Information exchange need not be reciprocal. However, the information disclosed had to be sufficiently clear to reduce uncertainty about the discloser’s future conduct and to place the recipient in a favourable position. The isolated and vague references at the Landmark Lunch to unilateral steps and big cards did not satisfy that requirement.
3. The circumstances also did not establish tacit assent by EE. The recipient’s silence did not amount to public distancing or acquiescence. Public distancing is a term of art: the undertaking must make its refusal to participate clear to the other participants, or report the conduct to the relevant authority. Body language, demeanour and an ambiguous email were insufficient.
4. Even if the Landmark Lunch had constituted an infringement, EE rebutted the Anic presumption. It entered into and expanded its agreement with Phones 4U shortly afterwards. There was also no sufficient evidence that O2’s decision was causatively influenced by the discussion. The alleged collusion between O2, Telefónica and Vodafone was not proved. The strategic decisions of the MNOs were capable of rational independent explanation, including expansion of direct channels, improved terms with CPW, and the effect of the Dixons/CPW merger.
5. The economic case did not establish that unilateral withdrawal from Phones 4U made no commercial sense. The MNOs’ internal models legitimately considered retention rates, improved CPW terms, direct-channel expansion, return on investment and the possibility that Phones 4U would restructure or fail.
6. DT and Orange would have been jointly liable with EE if EE had infringed competition law. The contractual structure, veto rights over business plans and budgets, shareholder-appointed directors holding senior parent-company positions, and close involvement in EE’s strategic and financial decisions established decisive influence. Direct involvement in, or awareness of, the infringement was unnecessary.
7. EE did not breach the EE Agreement. Clause 13.11 imposed good faith only in relation to activity designed to reduce or avoid revenue-share payments, not a general obligation. The detailed agreement and the competitive relationship between the parties precluded implication of a wider good-faith duty. In any event, notifying Phones 4U of EE’s final decision not to renew was not commercially unacceptable or a breach of good faith.
8. The claims for inducing breach of contract and unlawful-means conspiracy against DT and Orange therefore failed because there was no breach by EE.