Annual report 2014

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Canal+ Group

2.1.8.

Piracy

Canal+ Group actively combats audiovisual piracy. It gives priority to

innovation and technological monitoring and to prosecuting violators to

protect its commercial interests and those of its licensees.

2.1.9.

Competition

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2.1.9.1. Canalsatellite/TPS Merger

On September 20, 2011, the French Competition Authority issued a

decision in relation to Canal+ Group’s failure to comply with several

commitments to which it was subject under the August 30, 2006 decision

authorizing the merger between Canalsatellite and TPS. As a result,

it withdrew the decision authorizing the transaction, thereby forcing

Vivendi and Canal+ Group to give notice of the transaction again within

a month. In addition, the French Competition Authority ordered Canal+

Group, together with all its subsidiaries, to pay a fine of €30 million.

On October 24, 2011, notice of the transaction was again given to the

French Competition Authority, which, on July 23, 2012, issued its decision

on the new notice. This decision made the merger between Canalsatellite

and TPS subject to compliance with 33 injunctions, which are imposed for

five years and renewable once. They primarily affect:

the acquisition of film rights from US studios and French producers;

the interest of Canal+ Group, through its subsidiary Multithématiques

SAS, in Orange Cinéma Séries; and

the availability and distribution of independent or internal premium

and special-interest channels, as well as non-linear services (VoD

and SVoD).

Canal+ Group and Vivendi filed two appeals before the French Council

of State to have the decision of the French Competition Authority of

September 20, 2011 and the 33 injunctions set aside.

Both appeals were dismissed by two decisions dated December 21, 2012.

The French Council of State decided, however, to reduce the amount of

the fine imposed by the French Competition Authority by €3 million.

The enforcement of the injunctions was accompanied by the creation of a

dedicated organization within Canal+ Group. An agent was appointed to

monitor the successful enforcement of the injunctions by Canal+ Group,

and reports every three months to the French Competition Authority

on this implementation. In addition, two annual oversight meetings

between Canal+ Group, the agent and the representatives of the French

Competition Authority have already been held.

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2.1.9.2. Acquisition of the Direct 8

and Direct Star Channels

Notice of acquisition of the Direct 8 and Direct Star channels by Canal+

Group was given to the French Competition Authority on December 5,

2011 and the acquisition was approved by the Authority on July 23,

2012, subject to compliance with several commitments by Canal+ Group

over five years, renewable once after a new analysis of competition is

performed by the Authority.

These commitments involve:

a limit on acquisitions by Canal+ Group of combined free-to-air and

pay-TV rights to US films, US series and recent French films;

separate negotiation of these rights;

a limit on acquisitions by Direct 8 and Direct Star of French film

releases from Studiocanal; and

transfer of unscrambled broadcasting rights for major sporting events.

TF1 and M6 filed an appeal before the Council of State on the grounds

that the French Competition Authority’s decision approving the acquisition

of these two channels exceeded its powers. On December 23, 2013, the

Council of State annulled the Competition Authority’s decision, ruling that

it had not deliberated collectively on the version of the commitments

contained in its decision of July 23, 2012. Further, with regards to the

internal legality of that decision, the Council of State ruled that the

Competition Authority had committed an evaluation error in stating

that Commitment 2.2 would prevent the anti-competitive effects of the

deal, which are linked to restricting the French film rights markets in the

second and third unscrambled windows.

On January 15, 2014, Vivendi and Canal+ Group again provided notice to

the French Competition Authority on the acquisition of the Direct 8 and

Direct Star channels. On April 2, 2014, the Competition Authority again

authorized the Canal+ Group acquisition of Direct 8 Direct Star, Direct

Productions, Direct Digital and Bolloré Intermédia, subject to several

commitments.

The enforcement of the commitments was accompanied by the

establishment of a dedicated organization within Canal+ Group. An agent,

responsible for monitoring the correct enforcement of the commitments

by Canal+ Group, was appointed. He reports to the Competition Authority

every three months on this enforcement. In addition, two annual

oversight meetings of Canal+ Group, the agent and representatives of

the Competition Authority have already been held.

for movie channels:

–– first window: ten months for an original broadcast if an agreement

is entered into with film organizations, 12 months otherwise, and

–– second window: 22 months if agreed with the film organizations,

24 months otherwise;

on unscrambled television channels and on other pay television

channels:

–– 22 months if the channel contributes at least 3.2% of its revenue

to film production, and

–– 30 months otherwise; and

for subscription on demand films (Canalplay): 36 months.

Annual Report 2014