38
Annual Report -
2013
-
Vivendi
Group Profile | Businesses |
Litigation
| Risk Factors
1
On December 13, 2007, the Argentinian Government filed an application
to vacate the arbitration award on the basis, among others, of an
alleged conflict of interest regarding one of the arbitrators. The ICSID
appointed an ad hoc committee to rule on this application.
On August 10, 2010, the ICSID rejected the Argentinian Government’s
application and the award of August 20, 2007 became final.
On October 10, 2013, Vivendi and CAA entered into a settlement
agreement with the Argentine government which terminated their
dispute.
Claim by Centenary Holdings III Ltd.
Centenary Holdings III Ltd. (CH III), a former Seagram subsidiary,
divested in January 2004, was placed into liquidation in July 2005.
On January 9, 2009, the liquidator of CH III sued a number of its former
directors, former auditors and Vivendi. The liquidator, acting on behalf
of CH III’s creditors, alleges that the defendants breached their fiduciary
duties.
On September 30, 2010, Vivendi and one of the former directors of
CH III settled with the liquidator. This settlement put an end to the legal
proceedings brought against them and assigned to Vivendi all claims
filed on behalf of the creditors.
Vivendi, based on the rights of CH III obtained in the settlement,
sued Stephen Bloch, a former director of CH III, and Murray Richards,
the purchaser of CH III. The trial took place from June 12 through
June 27, 2013, and on October 9, 2013, the High Court in London ruled
in favor of Vivendi. On October 25, 2013, Court entered a judgment
requiring the defendants to pay the sum of £9,666,437.
Vivendi’s Complaint against Orange before the European
Commission for Abuse of a Dominant Position
On March 2, 2009, Vivendi and Free jointly filed a complaint against
Orange before the European Commission (the “Commission”), for
abuse of a dominant position. Vivendi and Free allege that Orange
imposes excessive tariffs on offers for access to its fixed network and
on telephone subscriptions. In July 2009, Bouygues Telecom joined
in this complaint. In a letter dated February 2, 2010, the Commission
informed the parties of its intention to dismiss the complaint.
On September 17, 2010, Vivendi filed an appeal before the Court of First
Instance of the European Union in Luxemburg. On October 16, 2013, the
Court denied Vivendi’s appeal.
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 (currently
approximately €4.9 million) 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 Appeal.
On April 30, 2013, the Court dismissed Telefonica’s claim for lack
of sufficient and concrete evidence of Vivendi’s responsibility for
Telefonica’s failing to acquire GVT. The Court notably highlighted the
inherently risky nature of operations in the financial markets, of which
Telefonica must have been aware. Moreover, the Court dismissed
Vivendi’s counterclaim for compensation for the damage it suffered
as a result of the defamatory campaign carried out against it by
Telefonica. On May 28, 2013, Telefonica appealed the Court’s decision
to the 5
th
Chamber of Private Law of the Court of Justice of the State
of São Paulo.
Dynamo against Vivendi
On August 24, 2011, the Dynamo investment funds filed a complaint
for damages against Vivendi before the Bovespa Arbitration Chamber
(São Paulo stock exchange). According to Dynamo, a former shareholder
of GVT that sold the vast majority of its stake in the Company before
November 13, 2009 (the date on which Vivendi took control of GVT),
the provision in GVT’s bylaws providing for an increase in the per share
purchase price when the 15% threshold is crossed (the “poison pill
provision”) should allegedly have applied to the acquisition by Vivendi.
Vivendi, noting that this poison pill provision was waived by a GVT
General Shareholders’ Meeting in the event of an acquisition by Vivendi
or Telefonica, denies all of Dynamo’s allegations. The arbitral tribunal
has been constituted and a hearing before the Bovespa Arbitration
Chamber should be scheduled shortly. In parallel, on February 6, 2013,
Dynamo filed an application with the 21st Federal Court of the capital of
the State of Rio de Janeiro to compel CVM and Bovespa to provide the
arbitral tribunal with confidential information relating to the acquisition
of GVT by Vivendi. This was rejected on November 7, 2013 as the Court
found that only the arbitral tribunal could make such an application.
In late December, Dynamo requested that the arbitral tribunal submit an
application for the confidential information from the judge.
Hedging-Griffo against Vivendi
On September 4, 2012, the Hedging-Griffo funds filed a complaint
against Vivendi before the Arbitration Chamber of the Bovespa
(São Paulo Stock Exchange) seeking to obtain damages for losses they
allegedly incurred due to the conditions under which Vivendi completed
the acquisition of GVT in 2009. On December 16, 2013, the arbitral
tribunal was constituted and the plaintiffs submitted their initial briefs.
The Hedging-Griffo funds demanded compensation for the difference
between the price at which they sold their GVT shares on the market
and 125% of the price paid by Vivendi in connection with the tender
offer for the GVT shares, pursuant to the “poison pill” provision in
GVT’s bylaws. Vivendi believes that the decision taken by the Hedging-
Griffo funds to sell their GVT shares before the end of the stock market
battle that opposed Vivendi against Telefonica was their own decision
made in the context of their management of these funds and can in no
way be attributable to Vivendi. It also denies any application of the
bylaw provision mentioned above, as it was waived by a GVT General
Shareholders’ Meeting in the event of an acquisition by Vivendi or
Telefonica.
