Despite the issuance of a recent directive by Italian telecommunications market regulator Agcom ordering Vivendi to reduce its holdings in the Italian market, the European Commission (EC) has approved a request by Vivendi to assume de facto control of Telecom Italia (TI), subject to conditions which require Vivendi to divest TI’s 70% stake in Italian broadcast service group Persidera.
Vivendi currently ranks as TI’s largest shareholder with a 24% stake. The French media conglomerate tightened its control over TI earlier this month after succeeding in its effort to appoint two-thirds of the members of the TI board. Over the past year, Vivendi has also completed a series of minority share purchases that have enabled the company to build a 29% stake in Italian broadcaster Mediaset. Capping an investigation which was launched in December and which concluded that Vivendi’s Italian shareholdings provide Vivendi with significant influence over TI and Mediaset in violation of Italian antitrust law, Agcom ordered Vivendi on April 18 to submit a “specific plan of action” within 60 days for reducing its holdings in either TI or Mediacom in order to avoid liability for fines of between two and five percent of Vivendi’s annual revenues.
Meanwhile, in wrapping up its own investigation into Vivendi’s plan to acquire de facto control over TI, the EC determined that Vivendi would have “an incentive to raise prices charged to TV channels in the market for wholesale access to digital terrestrial television networks, where Persidera and Mediaset each hold a significant share.” As such, the EC conditioned approval of the Vivendi-TI transaction upon the fulfillment of Vivendi’s commitment to divest TI’s stake in Persidera. With that remedy in place, the EC concluded that the proposed transaction “would not significantly reduce competition in the European Economic Area (EEA) or any substantial part of it, including Italy.” Emphasizing, however, that the EC “has exclusive jurisdiction to assess the impact of the proposed transaction on competition in the various markets affected within the EEA,” the EC stipulated that its findings with respect to the Vivendi-TI transaction are “without prejudice to the Italian media plurality review process,” adding that European Union member states “may take appropriate measures, including prohibiting proposed transactions, to protect other legitimate interests.”