CONSOLIDATED FINANCIAL STATEMENTS >
DIRECTORS’ REPORT
90
| 2013 ANNUAL REPORT | PRYSMIAN GROUP
LEGAL AND COMPLIANCE RISKS
Risks associated with intellectual property rights
Although the Group believes it has adopted a suitable
system for protecting its own intellectual property rights,
it cannot rule out that it might face difficulties in defending
such rights.
Intellectual property rights owned by third parties could hinder
or limit the Group’s ability to introduce new products to the
market. In addition, it is not possible to rule out the Group’s
possible involvement in legal actions involving intellectual
property rights, the outcome of which is often unpredictable.
Such circumstances could have an adverse impact on the
Group’s business, results of operations and financial condition.
Compliance risks associated with laws, regulations, Code of
Ethics, Policies and Procedures
Compliance risk is the risk of incurring legal or administrative
sanctions, material financial losses or reputational damage
as a result of violations of laws, regulations, procedures,
codes of conduct and best practices. Since its inception,
the Prysmian Group approved a Code of Ethics, a document
which contains ethical standards and guidelines for conduct
to be observed by all those engaged in activities on behalf
of Prysmian or its subsidiaries, including managers, officers,
employees, agents, representatives, contractors, suppliers
and consultants. In particular, the Code of Ethics requires
full compliance with current regulations and the avoidance
of any kind of misconduct or illegal behaviour. The Group
establishes organisational mechanisms designed to prevent
the violation of the principles of legality, transparency, fairness
and honesty and is committed to ensuring their observance
and practical application. Although the Group is committed to
ongoing compliance with applicable regulations and to close
supervision to identify any misconduct, it is not possible to
rule out episodes in the future of non-compliance or violations
of laws, regulations, procedures or codes of conduct by those
engaged in performing activities on Prysmian’s behalf, which
could result in judicial sanctions, fines or reputational damage,
even on a material scale.
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
associated with such proceedings. If the event of an adverse
outcome to such proceedings, the Group cannot rule out an
impact, even for a material amount, on its business, results
of operations and financial condition, as well as reputational
damages that are hard to estimate.
More specifically, the European Commission, the US
Department 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 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.
