Italy’s financial regulator Consob has ruled that Vivendi holds de facto control of TIM, sparking a formal appeal from Vivendi and a legal threat from the telco.

Consob has been looking into whether Vivendi breached a requirement to notify the Italian government that it effectively controls TIM.

Vivendi has accrued a 23.94 percent stake in TIM’s ordinary share capital, making it the largest shareholder, and installed its CEO, CFO and General Counsel on TIM’s Board of Directors.

Consob said that Vivendi’s presence within TIM constituted ownership under Italian law. The decision could result in a fine for Vivendi.

The decision is a blow for the French media group, which last month categorically denied that it is in a position to control the operator.

The Canal+, Universal Music Group and Dailymotion owner said it contested Consob’s view and will appeal to courts.

“The Group reiterates that it has always complied with applicable law and regulations,” it said in a statement.

TIM also hit out against the ruling in an official statement, declaring that Consob’s decision is in contrast with its previous “uncontroversial and consistent approach” on corporate control.

Its statement read: “The Company will take all appropriate legal actions in order to defend its interests, and is confident its conducts are correct and its arguments are strong.”

Vivendi is also facing problems over its stake in Italian broadcaster Mediaset, which communications regulator Agcom has argued violates media plurality rules when combined with its stake in TIM.

The regulator said in April Vivendi should reduce its stake in one of the two companies to under 10 percent, giving it 12 months to comply.

Vivendi has contested the decision.

Read more: TIM Chief Exec exits despite overseeing “never before been seen” recovery

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