The Court of Justice of the European Union said Italy's Communications Regulatory Authority (AGCOM) was wrong to rule against Vivendi in 2017 when the regulator stopped the deal, ordering Vivendi to reduce its holdings in Mediaset for breaching media ownership rules.
The regulator's ruling came after Vivendi launched a hostile acquisition campaign in 2016 for shares in Mediaset Italia Spa, an Italian company operating in the same sector and controlled by the Fininvest group. Vivendi succeeded in securing 28.8 percent of Mediaset's share capital and 29.94 percent of its voting rights.
Mediaset, part-owned by the family of Italy's former Prime Minister Silvio Berlusconi, had lodged a complaint against Vivendi, accusing it of having infringed the provision of Italian law.
AGCOM prevented Vivendi from going ahead with the acquisition, but the company challenged the decision in an Italian court, which referred the case to the EU court.
In its judgment on Thursday, the European court said the law on which the Italian watchdog had based its decision was in breach of EU law.
"The provision of Italian law preventing Vivendi from acquiring 28 percent of the capital in Mediaset is contrary to EU law," the court said in a statement.
It ruled that the Italian provision "sets thresholds which bear no relation to the risk to media pluralism," adding that "those thresholds do not make it possible to determine whether and to what extent an undertaking is actually in a position to influence the content of the media."
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