8. Risks of litigation and 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 third party intellectual property rights. Client-agency contracts generally require the agency to indemnify the client against claims for infringement of intellectual or industrial property rights.
Any potential damages and interest to be paid and legal fees arising from such actions may have a negative impact on the Groupe’s results. Moreover, Publicis’ reputation could be adversely affected.
The Groupe may face an increased reputational risk associated with serving clients who are perceived to have a negative impact on the environment.
In the ordinary course of its business, the Groupe may also be subject to requests for information from the judicial or administrative authorities in connection with investigations into business practices in its industry.
The Groupe operates in an environment subject to complex and constantly evolving legal and regulatory requirements.
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 anti-bribery and anti-corruption program deployed within the Groupe.
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
The Groupe has a structured legal governance and compliance framework, relying on the Legal Department, the Compliance Department, the tax teams and the local networks of managers.
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 and investigations. A summary of any significant legal disputes, as well as an estimate of their potential impacts, are presented to the Groupe’s Executive Management four times per year. The main ongoing litigation and investigations are discussed at each Audit and Financial Risks Committee meeting.
The Compliance Department deploys and oversees compliance programs in Groupe entities. It promotes an ethical culture, implements internal policies and procedures, including Janus, and supports local teams in applying the rules. Rigorous management of litigation and corruption risks is in place to identify, assess and minimize the associated potential legal and financial risks.
The Company records 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, compliance, and tax teams constantly monitor developments to ensure compliance with laws and regulations.
In terms of responsible marketing, the Groupe strives to raise professional standards to high levels of ethics and responsibility.