41
Annual Report -
2013
-
Vivendi
Group Profile | Businesses |
Litigation
| Risk Factors
1
Complaints against Music Industry Majors
in the United States
Several complaints have been filed before the Federal Courts in New
York and California against Universal Music Group and the other music
industry majors for alleged anti-competitive practices in the context of
sales of CDs and Internet music downloads. These complaints have
been consolidated before the Federal Court in New York. The motion
to dismiss filed by the defendants was granted by the Federal Court, on
October 9, 2008, but this decision was reversed by the Second Circuit
Court of Appeals on January 13, 2010. The defendants filed a motion for
rehearing which was denied. They filed a petition with the US Supreme
Court which was rejected on January 10, 2011. The discovery process
is underway. The Court has decided that the proceedings on class
certification will be completed in the second half of 2014.
Complaints against UMG regarding Royalties for Digital
Downloads
Since 2011, as has been the case with other music industry majors,
several purported class action complaints have been filed against UMG
by recording artists generally seeking additional royalties for on line
sales of music downloads and master ringtones. UMG contests the
merits of these actions.
Koninklijke Philips Electronics against UMG
On April 30, 2008, Koninklijke Philips Electronics filed suit against UMG
in the District Court for the Southern District of New York claiming
breach of contract and patent infringement in connection with a license
to manufacture CDs. On March 1, 2013, a jury rendered an unfavorable
verdict against UMG. On August 8, 2013, the parties entered into a
settlement agreement that ended this dispute.
Actions Related to the ICMS Tax
GVT, like all other telecommunications operators, is party in several
Brazilian States to various proceedings concerning the application of
the “ICMS” tax (
Imposto Sober Circulação de Mercadorias e Prestação
de Serviços
) is a tax on operations relating to the circulation of goods
and the supply of transport, communication and electricity services.
GVT is notably a party to litigation in various Brazilian States concerning
the application of the ICMS tax on voice telecommunication services.
GVT argues that the ICMS tax should not apply to monthly plans. Of the
21 proceedings initiated by GVT, 19 have resulted in decisions favorable
to GVT and 12 are no longer subject to appeal.
Actions Related to the FUST and FUNTTEL Taxes in Brazil
The Brazilian tax authorities argue that the assessment of the
taxes known as “FUST” (
Fundo da Universalização dos Serviços
de Telecomunicações
), a federal tax to promote the supply of
telecommunications services throughout the whole Brazilian territory,
including in areas that are not economically viable, and “FUNTTEL”
(
Fundo para Desenvolvimento Tecnológioco das Telecomunicações
),
a federal tax to finance technological investments in Brazilian
telecommunications services, should be based on the Company’s gross
revenue without deduction for price reductions or interconnection
expenses and other taxes, which would lead to part of that sum being
subject to double taxation. GVT is challenging this interpretation and
has secured a suspension of payment of the sums claimed by the tax
authority from the federal judge.
Proceedings Brought against Telecommunications Operators
in Brazil Regarding the Application of the PIS
and COFINS taxes
Several proceedings were initiated against all the telecommunications
operators in Brazil, including GVT, seeking to prevent invoices from
being increased by taxes known as “PIS” (
Programa de Integração
Social
) and “COFINS” (
Contribuição para Financiamento da Seguridade
Social
), which are federal taxes that apply to revenue from the provision
of telecommunications services. GVT believes that the arguments in
its defense have a stronger basis than those of the historic operators
insofar as GVT operates pursuant to a more flexible license that allows
it to set its own tariffs.
