Page 354 - 2012 Annual Report

354 VIVENDI l 2012 l Annual Report
FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS –
STATUTORY FINANCIAL STATEMENTS 4
4
IV - VIVENDI SA 2012 STATUTORY FINANCIAL STATEMENTS
3. NOTES TO THE 2012 STATUTORY FINANCIAL STATEMENTS
Note 24 Litigation
ACTION BROUGHT BY THE FRENCH COMPETITION AUTHORITY REGARDING PRACTICES
IN THE PAY-TV SECTOR
On January 9, 2009, further to its voluntary investigation and a complaint
by France Telecom, the French Competition Authority sent Vivendi and
Groupe Canal+ a notification of allegations. It alleges that Groupe Canal+
has abused its dominant position in certain pay-TV markets and that
Vivendi and Groupe Canal+ colluded with TF1 and M6, on the one hand,
and with Lagardère, on the other. Vivendi and Groupe Canal+ have each
denied these allegations.
On November 16, 2010, the French Competition Authority rendered a
decision in which it dismissed the allegations of collusion, in respect of
all parties, and certain other allegations, in respect of Groupe Canal+. The
French Competition Authority requested further investigation regarding
fiber optic TV and catch-up TV, Groupe Canal+’s exclusive distribution
rights on channels broadcast by the group and by independent channels
as well as the extension of exclusive rights on TF1, M6 and Lagardère
channels to fiber optic and catch-up TV. On December 17, 2010, France
Telecom appealed the decision before the Court of Appeal. Vivendi and
Groupe Canal+ joined these appeal proceedings. On July 15, 2011, France
Telecom withdrew its application for an annulment of the decision of the
Competition Authority.
INQUIRY INTO COMPLIANCE WITH CERTAIN UNDERTAKINGS GIVEN IN CONNECTION
WITH THE COMBINATION OF CANALSATELLITE AND TPS
The French Competition Authority opened an inquiry into compliance with
certain undertakings given by Vivendi and Canal+ Group in connection with
the merger of TPS and CanalSatellite.
On September 20, 2011, the French Competition Authority rendered a
decision in which it established that Canal+ Group had not complied with
certain undertakings – some it considered essential – on which depended
its decision authorizing, in 2006, the acquisition of TPS and CanalSatellite
by Vivendi and Canal+ Group. As a consequence, the French Competition
Authority withdrew the merger authorization, requiring Vivendi and Canal+
Group to re-notify the transaction to the French Competition Authority
within one month. Furthermore, the French Competition Authority ordered
Canal+ Group to pay a €30 million fine.
On October 24, 2011, the transaction was re-notified to the French
Competition Authority. On November 4, 2011, Vivendi and Canal+ Group
filed an appeal before the French Council of State against the French
Competition Authority’s decision dated September 20, 2011. As part of this
procedure, Canal+ Group had filed two Priority Constitutional Questions
(QPCs) concerning this decision, which were referred to the French
Constitutional Council by the French Council of State on July 17, 2012. On
October 12, 2012, the French Constitutional Council declared that the legal
and statutory provisions in question were constitutional.
On July 23, 2012, the French Competition Authority issued its decision
on this new notification. It authorizes the acquisition of TPS and
CanalSatellite by Vivendi and Canal+ Group, subject to compliance with
a certain number of injunctions. These injunctions are primarily focused
on the acquisition of film rights from American studios and French
producers, the participation of Canal+ Group in Orange Cinema Séries,
the distribution of premium channels and non-linear services (video-on-
demand and subscription video-on-demand).
On August 30, 2012, Vivendi and Canal+ Group filed an appeal before
the French Council of State to obtain cancellation of the July 23,
2012 decision. In addition, Vivendi and Canal+ Group have filed two
motions, one seeking a suspension of the September 20, 2011 decision
and the other seeking a suspension of the July 23, 2012 decision.
The French Council of State rejected these requests for suspension on
September 17, 2012 and October 22, 2012, respectively. A hearing on the
merits of the cancellation of the French Competition Authority’s decisions
of September 20, 2011 and July 23, 2012 was held on December 14, 2012.
On December 21, 2012, the French Council of State essentially confirmed
the two decisions of the French Competition Authority; however, it reduced
the fine of €30 million to €27 million because two of the alleged breaches
were unfounded.
TELEFONICA AGAINST VIVENDI IN BRAZIL
On May 2, 2011, TELESP, Telefonica’s Brazilian subsidiary, filed a claim
against Vivendi before the Civil Court of São Paulo (3ª Vara Cível do Foro
Central da Comarca da Capital do Estado de São Paulo). The company is
seeking damages for having been blocked from acquiring control of GVT
and damages in the amount of 15 million Brazilian reals (approximately
5.5 million euros) corresponding to the expenses incurred by TELESP in
connection with its offer for GVT. At the beginning of September, 2011,
Vivendi filed an objection to jurisdiction, challenging the jurisdiction of
the courts of São Paulo to hear a case involving parties from Curitiba.
This objection was dismissed on February 14, 2012, which was confirmed
on April 4, 2012 by the Court of Appeals. On the merits, Vivendi refuted
all of Telefonica’s claims. In particular, Vivendi believes that Telefonica
cannot claim to have suffered any “loss of chance” considering that its
President confirmed in a public statement that it did not want to outbid
Vivendi. Vivendi has also filed a counterclaim seeking to be compensated
for damages suffered as a result of the “smear campaign” carried out
against Vivendi by Telefonica since late 2009.