2014 ANNUAL REPORT

Consolidated Financial Report |

EXPLANATORY NOTES

2014 Annual Report

Prysmian Group

210

The provision for restructuring costs reports a net increase of

Euro 14 million.

In particular, Euro 33 million in new provisions has been

recognised during the period, while Euro 16 million has been

utilised, mostly in connection with projects underway in the

Netherlands, Germany and France.

The provision for contractual and legal risks, amounting

to Euro 234 million at 31 December 2014, has decreased by

Euro 23 million since 31 December 2013, mainly due to a net

reduction of Euro 29 million in the provision for antitrust

investigations in different jurisdictions.

More specifically, the European Commission, the US De-

partment of Justice and the Japanese Antitrust Authority

started investigations 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 investiga-

tion into a high voltage submarine project dating back to

2006. The investigations in Japan, New Zealand and Canada

have ended without any sanctions for Prysmian; the other

investigations are still in progress, except for the one by the

European Commission, which has ended with the adoption

of the decision described below.

In Australia, the ACCC has filed a case before the Federal

Court arguing that Prysmian Cavi e Sistemi 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. has filed its objections and

presented its defence.

In Brazil, the local antitrust authority has started an investi-

gation into several cable manufacturers, including Prysmian,

that operate in the high voltage underground and submarine

cables market. Prysmian has presented its preliminary

defence, which has been rejected by the local competition au-

thorities in a statement issued during the month of February

2015. The preliminary stage of the proceedings will now

ensue, at the end of which the authorities will publish their

concluding observations, to which the parties may respond

with all their arguments in defence before a final decision

is taken. During the month of December 2013, ABB and one

of this company’s senior managers signed an agreement

with the Brazilian Antitrust Authority, under which they

admitted the conduct alleged by the authority and pledged

to cooperate with it and to each pay an agreed fine.

On 2 April 2014, the European Commission adopted a decision

under which it found that, between 18 February 1999 and 28

January 2009, the world’s largest cable producers, including

Prysmian Cavi e Sistemi S.r.l., adopted anti-competitive

practices in the European market for high voltage submarine

and underground power cables. The European Commission

held Prysmian Cavi e Sistemi S.r.l. jointly liable with Pirelli

& C. S.p.A. for the alleged infringement in the period from 18

February 1999 to 28 July 2005, sentencing them to pay a fine

of Euro 67.3 million, and it held Prysmian Cavi e Sistemi S.r.l.

jointly liable with Prysmian S.p.A. and the Goldman Sachs

Group Inc. for the alleged infringement in the period from 29

July 2005 to 28 January 2009, sentencing them to pay a fine

of Euro 37.3 million. Prysmian has filed an appeal against this

decision with the General Court of the European Union and an

application to intervene in the appeals respectively lodged by

Pirelli & C. S.p.A. and the Goldman Sachs Group Inc. against

the same decision. Both Pirelli & C. S.p.A. and the Goldman

Sachs Group Inc. have in turn submitted applications to

intervene in the appeal brought by Prysmian against the

European Commission’s decision. Prysmian has not incurred

any financial outlay as a result of this decision having

elected, pending the outcome of the appeals, to provide bank

guarantees as security against payment of 50% of the fine

imposed by the European Commission (amounting to appro-

ximately Euro 52 million) for the alleged infringement in both

periods. As far as Prysmian is aware, Pirelli & C. S.p.A. has

provided or is nonetheless preparing to provide the European

Commission with a bank guarantee for 50% of the value of

the fine imposed for the alleged infringement in the period 18

February 1999 - 28 July 2005. Pirelli & C. S.p.A. has also filed

a civil action against Prysmian Cavi e Sistemi S.r.l. in which

it demands to be held harmless for all claims made by the

European Commission in implementation of its decision and

for any expenses related to such implementation. Prysmian

Cavi e Sistemi S.r.l. filed its reply in February 2015, requesting

that the claims brought by Pirelli & C. S.p.A. be rejected

in full and that it should be Pirelli & C. S.p.A. which holds

harmless Prysmian Cavi e Sistemi S.r.l., with reference to the

alleged infringement in the period 18 February 1999 - 28 July

2005, for all claims made by the European Commission in

implementation of its decision and for any expenses related

to such implementation. Following a detailed and careful

analysis of the European Commission’s ruling, and none-

theless considering this has been appealed and so could be

submitted to second-instance judgement, as well as the fact

that the investigations initiated by the Canadian Antitrust

Authority have ended without any sanctions for Prysmian,

it has been decided to release part of the existing provision.

Prysmian has also learned from several sources, including

sources in the public domain, that some British operators