MILAN (Reuters) - An Italian regulator ordered French media group Vivendi (VIV.PA) on Tuesday to cut its stake in either Telecom Italia (TLIT.MI) or broadcaster Mediaset MS.IT within a year, ruling it was in breach of rules designed to prevent a concentration of power.
Vivendi, which aims to build a media empire in southern Europe, is the biggest single shareholder in Italy’s main telecoms firm, with 24 percent, and recently acquired 28.8 percent of Mediaset, the country’s biggest private broadcaster.
In its ruling, communications authority AGCOM found Vivendi exercised significant influence over both firms and was therefore in breach of the anti-trust rules. It threatened to fine Vivendi an amount equal to between 2 and 5 percent of its revenues unless it complied with the divestment.
The authority did not say how much Vivendi would need to divest in either company but ordered the French group to present it with a “specific plan of action” within 60 days.
AGCOM said the links between Vivendi, Telecom Italia and Mediaset risked producing a negative effect “on the existing level of competition in the markets involved and on the degree of pluralism in the media system”.
Vivendi said it was surprised by the decision and reserved the right to take “any appropriate legal action”, including an appeal and a formal complaint to the European Commission for breach of EU law. It did not elaborate.
Italy’s media laws grew partly out of parliamentary concerns in the 1990s over the combined political and business power of then prime minister and media tycoon Silvio Berlusconi, who remains the largest shareholder of Mediaset.
Now, the laws appear to be working in Berlusconi’s favor.
Vivendi drew regulatory scrutiny after building an unwelcome stake in Mediaset, becoming its second-largest investor. That angered Berlusconi and raised concerns in Rome about Vivendi chairman Vincent Bollore’s influence over corporate Italy.
Mediaset said it was satisfied with the regulator’s decision, which came late on Tuesday, and was waiting to read the full ruling before deciding on any future action.
In relation to Mediaset, AGCOM said Vivendi’s influence could be expressed through its voting rights, its potential to nominate its own representatives to the board and block any decisions of an extraordinary nature.
AGCOM opened the investigation into Vivendi on Dec. 21 after Mediaset filed a complaint.
Mediaset and Vivendi are battling each other in court over the decision by the French group to pull out of an 800 million euros ($860 million) contract to buy the Italian group’s pay-TV unit Premium.
Additional reporting by Mathieu Rosemain in PARIS and Stephen Jewkes in MILAN; Editing by Mark Bendeich