Vivendi to challenge Italian ruling on Telecom Italia and Mediaset stakes

Vivendi has said it will take “any appropriate legal action” including a possible complaint to the European Commission after Italian regulator AGCOM ruled that it must divest a yet-to-be-specified part of its stake either in Mediaset or in Telecom Italia to conform to the country’s media concentration rules.

The watchdog ruled yesterday that Vivendi could not simultaneously hold its sizeable stakes in Italy’s principal telecom operator and leading commercial broadcaster and would have to sell one or the other within 12 months.

AGCOM ordered Vivendi to submit a plan confirming how it would comply with the order within the next 60 days.

Vivendi said it was “surprised” by the ruling and stated that it has “always operated within Italian law, and specifically the Gasparri Law regarding regarding the protection of media pluralism from the creation of dominant positions”.

The French media group said that it was “undisputable” that it  “neither controls nor exercises a dominant influence on Mediaset”, pointing out that Fininvest exercises exclusive control over the broadcaster with its 40% stake.

Vivendi said it would consider all appropriate legal moves to protect its interests, including filing an appeal with the TAR regional administrative court and submitting a formal complaint to the EC, holding that the ruling is in breach of EU law.

While AGCOM has ruled that Vivendi is in breach of Italian law, it has not specified exactly how much of a divestment in either of the two companies will be required. Vivendi currently controls about 24% of Telecom Italia and 28.8% of Mediaset.

The regulator’s ruling follows an investigation as to whether Vivendi is in breach of a provision of the Testo Unico dei Servizi di Media Audiovisivi e Radiofonici (TUSMAR) regulation that electronics communications companies with a market share in excess of 40% cannot control more than 10% of a Sistema Integrato delle Comunicazioni (SIC) – meaning a large TV, radio and publishing outfit, such as Mediaset.

The TUSMAR rule is intended to set a ceiling on the extent of concentration of communications and media in the interest of pluralism, competition and the rights of citizens.

Vivendi has already argued that a move by AGCOM against it would be discriminatory and would imply a rewriting of the rules rather than an application of existing regulations.

If Vivendi is forced to part with either of its stakes, the consensus opinion is that it will choose to retain its holding in Telecom Italia – not least because divesting this stake would involve a greater financial loss by a factor of about 10. Retaining its stake in the telco would also be in line with the company’s stated strategy.

Vivendi has already notified the EU that Telecom Italia’s shareholder meeting on May 4 could give it de facto control of the operator, with a two-thirds majority of nominees on its board.

Vivendi has, on the other hand, relatively little prospect of gaining control of Mediaset without the Italian broadcaster’s agreement.