Free definitely wins a long-standing legal tussle with SFR

Free definitely wins a long-standing legal tussle with SFR

The Court of Cassation finally ruled in favor of Free in the case of subsidized mobiles against SFR.

A conflict that had opposed the two operators since 2012. SFR had indeed launched a commercial operation called “Carré”, allowing its subscribers to acquire a smartphone at an “attractive” price, by increasing the mobile plan for 12 to 24 months for a purchase at a lower cost than if they opted for a smartphone without a subscription. However, Free explained that the smartphone could be much more expensive, with as a notable example a Blackberry sold for 239.9 euros “bare”, but only 9.99 euros on condition of subscribing with a 24-month subscription accompanied by an additional 14 euros (69 euros instead of 55 euros) on the mobile plan, which ultimately resulted in paying 106 euros more for the device.

For Free, the operation carried out by SFR fell under consumer credit but did not respect the rules, thus making “an unfair and misleading commercial practice”, aimed at retaining its subscribers after the birth of Free Mobile. Xavier Niel’s operator therefore sued SFR before the Paris Commercial Court in 2012, for “unfair and misleading practices” as well as for non-compliance with the provisions of consumer credit, which would constitute “illegal and unfair advertising ”. A battle from which he emerged victorious today.

A story full of twists and turns

Free claimed damages of 29 million euros at the time, then in 2013, the Commercial Court finally dismissed the operator, considering that “in the SFR Carré formula, the price of the mobile terminal is paid in cash, when purchased concurrently with the subscription, and that the conditions of sale of the terminal are independent of the subscription”. The judges had therefore considered in the first place that the offer was a subscription with commitment and the acquisition of a smartphone at its end. Free was ordered to pay €300,000 in damages, in particular following an interview with Xavier Niel that “disparaged” SFR.

The operator then tried to appeal, claiming in particular 76.8 million euros in damages, but finally saw its request rejected in 2016. Free, however, had not given up with an appeal in cassation, which overturned the table. On March 7, 2018, the Court of Cassation overturned the decision of the Court of Appeal. She considers in fact that it is not excluded “an operation consisting in delivering a product whose price is paid by installments, integrated each month into the fee for a subscription taken out for an associated service” is compared to a consumer credit. SFR then appealed, but the Court of Appeal considered in 2019 that the “Carrés” offers should be seen as disguised consumer credit, also observing that “some consumers have repaid SFR much more than they were loaned” and that “lhe real cost of terminals is hidden. This mechanism can therefore lead consumers to spend more, without their necessarily being aware of it. SFR, by knowingly concealing the onerous nature of the credit, ignores the interest rate which, however, in some cases is well above the usury rate (20.65%). SFR, by not informing the consumer of the overall cost of his subscription with the purchase of the terminal at the attractive price, knowingly misleads the consumer into believing that this option would be more attractive, which is not always the case“.

SFR therefore in turn lodged an appeal in cassation, which was rejected on March 16. If the operator in the red square was ordered to pay 3,000 euros in legal costs, the damage suffered by Free has not yet been assessed, but the Court of Appeal must determine its amount soon. Xavier Niel’s operator for his part is claiming 98.75 million euros in damages. Other procedures around subsidized offers are also underway, this time targeting Orange and Bouygues Telecom.

Source: Capital

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