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Phones 4U reaches from beyond the grave to claw back millions

Zombie hand holding smartphone blank screen up from the grave in the cemetery at night. This illustration is Halloween theme

Phones 4U administrator PwC has appointed one of the UK’s leading insolvency experts to assess whether there are grounds to make a claim against mobile operators for unlawful collusion.

According to the Telegraph, PwC has pulled in Paul Copley to read the lay of the land and decide whether there is enough evidence to launch a lawsuit against the operators which could be worth ‘hundreds of millions’. The MNOs must have thought they had seen the back of Phones 4U considering the firm entered administration in September 2014, though the emergence of Copley will not be a welcome sign.

Copley is widely regarded as one of the leading insolvency experts in the UK. While he does now work as CEO of Kaupthing ehf, Copley worked at PwC for almost 20 years, finishing as Partner specialising in corporate restructuring and insolvency. Perhaps the most notable inclusion on the CV is his work at Lehman Brothers International where he was Joint Administrator, cleaning up the mess which kicked off a global recession and being responsible for the liquidation of a £15 billion asset portfolio.

The base of Copley’s investigation is the suspicion of industry collusion to essentially screw Phones 4U out of the UK market. Having launched in 1996, the retailer amassed a footprint with more than 600 stores around the UK, with the business model primarily relying on partnerships with the major MNOs. In April 2012, Phones 4U’s contract with provider Three was terminated, with Three suggested it wanted to focus on its own direct sales channels. Two years later, O2 ditched its own partnership, while EE and Vodafone bowed out later in the year. With the final two partnerships ending, Phones 4U went into administration the following day.

The question which Copley will have to answer is whether industry collaborated to effectively end the role of Phones 4U in the UK market.

Governments are often highly sensitive to any wrong-doing which would negatively impact competition, and this sensitivity is almost certainly heightened when jobs are placed under-threat. If the MNOs are found to have participated in any nefarious conversations or activities, the 1700 lost jobs will add fuel to the case. Some of these jobs were potentially saved by the MNOs and Phones 4U competitors swooping in for a good deal on stores, but the impact will have been felt.

This is of course not the first time the MNOs have been blamed for the failings of Phones 4U as a business, the initial administration press release conveyed ‘shock’ at the decisions of EE and Vodafone, though whether there is any evidence to sue remains to be seen. Over to you Paul.


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