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Group Profile | Businesses | Litigation |
Risk Factors
Section 4
Risk Factors
Vivendi regularly conducts a review of the risk factors that could have a
negative impact on its operations or results. This review is presented to
the Audit Committee. Vivendi has not identified any significant risks other
than those described below.
Legal Risks
Risks Associated with Regulations
applicable to the Group’s Operations
In the ordinary course of its business, Vivendi must comply with complex,
restrictive and evolving regulations, particularly those governing the
broadcasting sector.
Substantial changes in the legislative environment, the application or
interpretation of regulations by the French Competition Authority or by
administrative, judicial or other authorities, particularly with respect
to competition law, tax law, and sundry taxes, may result in Vivendi
incurring additional costs or altering the products and services it offers,
which may materially impact its business, financial position, results and
development prospects.
In addition, certain operations of the group are dependent on obtaining
or renewing licenses issued by regulatory authorities, (particularly,
in France, the
Conseil Supérieur de l’Audiovisuel
(CSA, the French
Broadcasting Authority). The process of obtaining or renewing these
licenses can be long, complex and costly. Vivendi’s ability to achieve its
strategic objectives may be impaired if it is unable to obtain or retain in
a timely manner the licenses required to conduct, continue or expand its
operations. For a detailed description of the regulatory environment in
which the group operates, see Section 2 of this chapter.
Litigation Risks
The group is involved in, or could become involved in, a number of
lawsuits or investigations initiated by shareholders, consumers,
competitors, or regulatory or tax authorities. In some of these cases, if
Vivendi fails to negotiate an amicable settlement it may be ordered to
pay damages or financial penalties.
For a description of the main disputes and investigations in which the
group is involved, see Note 26 to the Consolidated Financial Statements
(Chapter 4 of this report) and the “Litigation” section of this chapter.
Vivendi recognizes a provision each time a risk is identified and seems
probable, the amount of which can be quantified or estimated within a
reasonable margin. The occurrence of events during a proceeding may
result, at any time, in a re-appraisal of the risk. With the exception of the
main legal proceedings and investigations described in this section and
in Note 26 to the Consolidated Financial Statements (Chapter 4 of this
report), Vivendi considers it unlikely that current proceedings will have a
material negative impact on the group’s financial position.
Risks Associated with Vivendi’s Commitments
Vivendi and its subsidiaries have made a number of conditional
commitments, the most important of which are described in Note 25 to
the Consolidated Financial Statements for the year ended December 31,
2014. Some of these commitments are unlimited in their duration or
amount. If Vivendi has to make a payment to satisfy one or more of these
commitments, this could have a negative impact on its financial results
and financial position.
Risks Associated with the Group’s Operations
Risks Associated with Piracy and Counterfeiting
The development of computer and electronic equipment and the decline
in its cost, as well as technological advances, facilitate the unauthorized
reproduction of music and audiovisual works. Concomitantly, increased
access to high-speed Internet connections has enabled, and continues
to enable, computer, smartphone and tablet users to share such works
more easily (and in greater number), without the copyright holder’s
authorization and without paying royalties.
Vivendi is dependent on the decisions of public or administrative
authorities and their determination to find effective means to combat
piracy. Persistent difficulties in passing and applying suitable legislation
or in enforcing court rulings, particularly in certain regions of the world
where piracy is endemic, constitute a threat to Vivendi’s businesses,
which depend heavily on the intellectual property rights owned by or
licensed to the group.
Section 2 of this chapter contains a detailed analysis of piracy issues
and measures taken by each of the group’s business units to combat it.
Risks Associated with Infrastructure,
Service Platforms and Data Protection
The infrastructure of some of the group’s operating units may be affected
by damage or interruption to the service provided to customers or
subscribers as a result of hardware or software failure, human error,
service provider failure, equipment sabotage or hacking (physical or
electronic) into operating systems or critical software, and this could have
an impact on their business operations.
The security of infrastructures, information systems and service platforms
is an ongoing concern at Vivendi, as is the safeguarding of access to,
privacy, and protection of transmitted personal data.
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Annual Report 2014