Vivendi set to complain to EU over proposed Italian media plurality law

Italy has recently drafted a law, currently under discussion in parliament, what would require regulator AGCOM to investigate for up to six months companies operating in both the telecoms and media sectors at a significant scale.

 

This move will directly affect French media firm Vivendi, which currently owns a 24% stake in incumbent operator Telecom Italia (TIM) as well as a contentious 29% of Italy’s top broadcaster, Mediaset.

 

As a result, Vivendi is readying itself to challenge the new law in an EU court, arguing that the bill “breaches the principles of legality and legal certainty and… the right to property, which are all protected by EU law and international conventions,” according to a letter from CEO Arnaud Depuyfontaine to the Italian PM and assorted ministers.

 

According to Reuters, a similar letter has already been sent to Thierry Breton, European Commissioner for the internal market.

 

Part of the issue here seems to be the nature of Vivendi’s stake in Mediaset. The French media company was initially set to buy Mediaset’s pay-TV unit some years ago, but the deal fell through in 2016, with Vivendi instead building a 29% stake in the company. Mediaset considers this stake hostile, with Vivendi using its stake to block Mediaset’s European expansion. The companies have since been embroiled in a lengthy legal battle over damages incurred by the failed deal.

 

Recently, reports have suggested that the two companies are in discussion to resolve the matter, though claims that Vivendi is proposing a 50–50 joint venture with Mediaset have been denied by the latter.

 

But perhaps the most interesting dimension of this argument is not how it relates to Mediaset, but to TIM. 

 

TIM is currently in the process of navigating a merger with state-backed Open Fiber, ultimately creating a single broadband network for Italy called AccessCo.

 

This is a merger that the Italian government has been championing for a long time, arguing that such a move will save enormous costs by removing any potential duplicated infrastructure deployment. TIM, on the other hand, was reluctant to agree to any such a move unless it retained control of any resultant joint venture, something which the government was initially loath to concede. 

 

However, the government did ultimately concede in August, leaving the deal’s future in the hands of the European Commission. The regulator is unlikely to look favourably upon the move, since the merger effectively recreates the monopoly that the EU took so many years dismantling. 

 

How is relates to Vivendi is simple: the French company says that if the new law is passed it would consider withdrawing its support from the merger as a TIM shareholder, potentially throwing yet another major spanner in the works. 

 

Whether such a threat is enough to dissuade the government from implementing the new law remains to be seen. The many quarrels throughout the Italian telecoms sector have been ongoing for years and clearly show no signs of stopping.