IPhone 4 - bought and can not activate

Can anyone out there help me, as I am going around in circles!!!!
Lost my iPhone 4 just before Christmas, insurance company will not cover loss (don't go there!) so I have had to purchase a handset only iPhone 4.
To try and save a bot of money at Xmas, I purchased through a private sale. Phone arrived, no problems and inserted the new microsim O2 had sent for when I got a new phone. Activated sim with O2 and inserted into phone.
The phone I believe has never been used therefore I need to go through the configuration, i.e telling it British, UK region, location services, Wi-Fi networks, then when activating phone it says 'only compatible SIM cards from a supported Carrier maybe used to activate iPhone. Phoned O2 who say sim is fine and activated, they said it seems the phone maybe blocked.
Went to Apple Store in London, and they said it was purchased in Ireland and therefore maybe blocked by carrier over there. I contacted the guy who sold me the phone and he said although he had not used the phone in Ireland, he had put in an Irish sim to test phone before he sent it to me.
How do I go about unlocking the phone so I can use it?????
Any help would be greatly appreciated.

ONLY the carrier it is locked to can authorize unlocking it. Most require that you are a current customer with several months of service AT LEAST under your belt before they will unlock, and then there is a charge.
According to this list: http://support.apple.com/kb/ht1937 All of the carriers in Ireland offer unlocking. Contact the carrier it is locked to and find out what their requirements are. In some cases, carriers may not unlock phones except for the ORIGINAL purchaser.

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