John Caudwell, the outspoken founder of Phones 4U, has called for the markets regulator to investigate whether the “bully boy” mobile phone industry acted in collusion to cause the demise of the high street retailer on Monday.
Phones 4U’s collapse into administration has put the jobs of almost 6,000 people and the future of 550 UK stores at risk – making it the largest retail failure on Britain’s high streets since the demise of Comet in 2012.
Mr Caudwell, who sold the business for £1.5bn in 2006 to Providence Equity Partners and Doughty Hanson, told the FT that there had “probably been some collusion to ruthlessly eliminate Phones 4U from the high street”.
He called on the Competition and Markets Authority to investigate why the three of the UK’s four mobile operators had decided to withdraw from Phones 4U in the space of a year, describing it as an “unprecedented attack” by “multinational bully boys to kill a healthy business”. The smallest operator, Three, withdrew in April 2012.
“Where is the regulator? Where is the government?” Mr Caudwell said on Monday. “This is a blatant attempt to remove competition. I fear that there has probably been some collusion to ruthlessly eliminate Phones 4U from the high street. The only beneficiaries are the networks.”
A Vodafone spokesman said: “We absolutely reject that allegation which is wholly without foundation. The decision to terminate our contract with Phones4U was made independently by the Vodafone UK management team on purely commercial reasons following extensive negotiations.”
EE declined to comment, Three was not available for comment. The CMA said that it would look at any complaint made.
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An O2 spokesman said: “We informed Phones 4U of our decision to stop connecting new customers through our partnership back in 2012. We subsequently took the decision not to extend our contract beyond 31 January 2014. This was a commercial decision we made independently as part of our regular review of our sales distribution.”
Phones 4U was reliant on the telecoms industry to provide mobile contracts that it could sell to customers. Mobile phone groups have said that their decisions to withdraw from the retailer were made on commercial grounds, and follow strategic reviews that led them to move away from the long standing practice of using third party stores to reach customers.
All four operators have extensive retail chains of their own, and much of their business is now conducted online. They have also become less willing to pay the fees demanded by third party retailers.
On Monday, it emerged that Phones 4U had tried to sell itself to Vodafone and EE before the two operators made their decisions to withdraw products from its stores.
Phone’s 4U’s decision to seek creditor protection was quickly followed by furious row about who was to blame, between the mobile operators and the retailer’s current owner, private equity group BC Partners. It had acquired Phones4U in 2011 for £600m, and secured a profit on its investment thanks to a £200m dividend last year that was made possible by issuing debt.
Date: September 15, 2014