Consolidated Financial Statements >
Directors’ Report
104
| 2012 annual report prysmian group
Risks relating to legal and tax proceedings
Prysmian S.p.A. and some Prysmian Group companies are
currently involved in tax and legal proceedings in connection
with their business, involving civil, criminal and administrative
actions. In some of these cases, the company might not be
able to accurately quantify the potential losses or penalties
and, if the proceedings have an adverse outcome, this could
have even a material impact on the Group’s activities, results
of operations and statement of financial position.
More specifically, the European Commission, the US
Department of Justice and the Japanese antitrust authority
started an investigation in late January 2009 into several
European and Asian electrical cable manufacturers to verify
the existence of alleged anti-competitive practices in the
high voltage underground and submarine cables markets.
Subsequently, the Australian Competition and Consumers
Commission (“ACCC”) and the New Zealand Commerce
Commission also started similar investigations. During 2011,
the Canadian antitrust authority also started an investigation
into a high voltage submarine project dating back to 2006.
The investigations in Japan and New Zealand ended in
previous years without any sanctions for Prysmian. The other
investigations are still in progress.
In Australia, the ACCC has filed a case before the Federal Court
arguing that Prysmian Cavi e Sistemi S.r.l. (formerly Prysmian
Cavi e Sistemi Energia S.r.l.) and two other companies violated
antitrust rules in connection with a high voltage underground
cable project awarded in 2003. Prysmian Cavi e Sistemi S.r.l.
was officially served with this claim in April 2010. It has since
filed its objections and will now have to defend itself.
In Brazil, the local antitrust authority has started an
investigation into several cable manufacturers, including
Prysmian, in the high voltage underground and submarine
cables market (this is the only investigation for which the
Group has been unable to estimate the size of the provision).
Prysmian has taken steps to present its preliminary defence.
At the start of July 2011, Prysmian received a statement of
objection from the European Commission in relation to the
investigation started in January 2009 into the high voltage
underground and submarine energy cables market. This
document contains the Commission’s preliminary position on
alleged anti-competitive practices and does not prejudge its
final decision. Prysmian has submitted its defence which it
was also able to present at the hearing before the European
Commission held during the month of June 2012.
Already during 2011, in view of the developments in
the European Commission investigation, management
believed that it was able to estimate the risk relating to the
investigations underway in the various jurisdictions, except
for Brazil. As at 31 December 2012, the Prysmian Group has
recognised approximately Euro 207 million in provisions for
risks and charges in connection with these investigations. This
amount has been determined on the basis of partly subjective
considerations and is only an estimate since the outcome of
the investigations in progress is still uncertain. It is therefore
not possible to exclude that the Group could be required to
meet liabilities not covered by the provisions for risks should
such litigation have an adverse outcome, with a consequently
negative, even material, impact on its activities, results of
operations and statement of financial position.
