9. Risks of litigation, governmental, legal and arbitration proceedings
Description of the risk
The Groupe may be named as defendant or co‑defendant in litigation brought against its clients by third parties, its clients’ competitors, governmental or regulatory bodies, or consumer associations. These actions could, in particular, relate to the following complaints:
- the advertising claims used to promote the products or services of these clients are false, deceptive or misleading;
- the client products are defective or could cause harm to others;
- the advertising materials created for its clients infringe the intellectual property rights of third parties. Client‑agency contracts generally require the agency to indemnify the client against claims for infringement of intellectual or industrial property rights.
Any damages and interest to be paid, and legal fees arising from such actions may have a negative impact on the results of the Groupe. Moreover, Publicis’ reputation could be negatively affected by such actions.
The Groupe may face an increased reputation risk associated with serving clients who are perceived to have a negative impact on the environment.
During the normal course of its business, the Groupe may also receive requests for information from the justice or administrative authorities as part of inquiries into business practices in its industry.
The Groupe is subject to strict anti‑corruption regulations. As the Groupe operates in a number of countries where the risk of corruption has been considered high, a breach of these regulations (including a compliance failure by a partner) could occur despite the Groupe’s anti‑bribery and anti‑corruption program.
The diversity of tax regulations combined with their different interpretations may expose the Groupe to tax reassessments.
The Company is not aware of any pending or threatened governmental, legal or arbitration proceedings likely to have or having had in the last 12 months a significant effect on the financial position or profitability of the Company and/or the Groupe, other than those mentioned in Note 22 to the consolidated financial statements (Section 6.6).
Risk management
In terms of responsible marketing, the Groupe strives to raise professional standards to high levels of ethics and responsibility.
Comprehensive controls are in place for the management of litigation and corruption risks, entailing the identification, evaluation, and mitigation of any associated potential legal and financial risks. The Company establishes a provision whenever a risk is determined and appears probable, and its amount can be either quantified or reasonably estimated. The occurrence of events during the proceedings may lead to a reassessment of this risk at any time.
The Legal Department, which reports to the Secretary General, plays an essential role in this process by alerting the Groupe to potential risks, implementing mitigation strategies with the help of operational staff, and managing ongoing litigations. A summary of any significant legal disputes, as well as an estimate of their potential impacts, are presented to the Groupe’s senior management four times a year.
The main litigations are discussed at each Audit Committee meeting.
The legal, compliance and tax teams maintain a constant monitoring to ensure compliance with laws and regulations.