APC 2014 Annual Report Download - page 43

OVERVIEW OF THE GROUP’S STRATEGY, MARKETS AND BUSINESSES
RISK FACTORS
Disputes
1
Following public offers launched in1993 by SPEP (the holding the entire GIS issue was made on April10, 2014, by the Court of
company of the Group at the time) for its Belgian subsidiaries Justice of the European Union (CJEU), which specifies how the fine
Cofibel and Cofimines, proceedings were initiated against former paid by Schneider Electric could be divided between Schneider
Schneider Electric executives in connection with the former Electric and its two former subsidiaries. In this context, a
Empain-Schneider Group’s management of its Belgian settlement could be reached between Schneider Electric and its
subsidiaries, notably the Tramico sub-group. At the end of two former subsidiaries in 2015.
March2006, a criminal court in Brussels, Belgium, ruled that some In relation to the GIS disputes, on May21, 2010, British company
of the defendants were responsible for certain of the alleged Power networks (formerly EDF EnergyUK) launched a claim
offenses and that some of the plaintiffs’ claims were admissible. against the same companies, including Schneider Electric, for
The plaintiffs claimed damages representing losses of damages of GBP15million in the High Court in London, England.
EUR5.3million stemming from alleged management decisions that This claim is currently being investigated and there were no
reduced the value of or undervalued assets presented in the significant developments in2014.
prospectus used in conjunction with the offering, as well as losses In addition, some Group entities worldwide, including Brazil and
of EUR4.9million in relation to transactions carried out by PB Pakistan, are directly or indirectly cited in anti-trust proceedings
Finance, a company in which Cofibel and Cofimines then held without, however, the proven or serious risk of conviction in this
minority interests. In its ruling, the court also appointed an expert regard having been identified to date.
to assess the loss suffered by those plaintiffs whose claims were
ruled admissible. The expert’s report was submitted in 2008. The Schneider Electric was also among 2,000 companies worldwide
defendants and the companies held civilly liable contest the that were mentioned in the Volcker report on the Oil for Food
amounts provided by the legal expert in their entirety on the basis program published by the UN in October2005. Schneider Electric
of such reports drawn up by Deloitte. Schneider Electric and its Industries SAS was investigated by the French judiciary in 2010 in
Belgian subsidiaries Cofibel and Cofimines were held civilly liable relation to this report, which stated that the Group had entered into
for the actions of their senior executives who were found liable. agreements with the Iraqi government between 2000 and 2004
Schneider Electric is paying the legal expenses not covered by the under which surcharge payments totaling approximately
insurance of the former executives involved. After a settlement USD450,000 are alleged to have been made to the Iraqi
agreement was signed with a group of plaintiffs, the case now government. In May2013, in accordance with the indictment of the
remains pending before the Brussels Appeals Court, due to (i) Public Prosecutor’s Department, the judge referred Schneider
appeals against parts of the March2006 ruling and (ii) a ruling Electric IndustriesSAS and 13 other French companies to the
made in2011 by the Court of First Instance regarding the criminal court, which should render its decision in 2015.
admissibility of the plaintiffs’ claims. The discussions entered into with ERDF in 2013 regarding a
In connection with the disposal of Spie Batignolles, Schneider potential defect designated «soft button» (non-reset) affecting
Electric booked provisions to cover the risks associated with connection breakers (DB90) produced between 1990 and 2010
certain major contracts and projects. Most of the risks were closed led to a transaction that was signed in July2014. This transaction
during 1997. Provisions were booked for the remaining risks, provides for the delivery to ERDF in 2017 of certain products,
based on management’s best estimate of the potential financial whose cost has been provisioned.
impact. One of the main issues concerns pending litigation in Various other claims, administrative notices and legal proceedings
France with SNCF before the administrative court. have been filed against the Group concerning such issues as
New files implicating the Group for Spie Batignolles’ past activities contractual demands, counterfeiting, risk of bodily harm linked to
could still arise and result in costs associated with defending the asbestos in certain older products and work contracts.
Group’s interests. Finally, note that in the context of recent acquisitions, of the
Schneider Electric and other companies in the high voltage sector companies such as Electroshield and Invensys, Schneider Electric
have been involved in legal proceedings with regard to an alleged could be exposed to new risks and have inherited litigation that
agreement initiated by the European Commission concerning gas may have a significant financial impact in the coming years, but for
insulated switchgears (GIS). These procedures involve two former which, however, numerical estimates cannot be made at this point.
Group subsidiaries operating in the high voltage segment that were Although it is impossible to forecast the results and/or costs of
sold in 2001 and that are now part of the Siemens group. these proceedings with certainty, Schneider Electric considers that
Schneider Electric did not appeal the decision made by the they will not, by their nature, have significant effects on the Group’s
Commission with regard to this matter on January24, 2007 and business, assets, financial position or profitability. The company is
was fined EUR8.1million. The Group recovered two-thirds not aware of any other governmental, court or arbitration
reimbursement of the amount of this fine from its two former proceedings, which are pending or which threaten the company,
subsidiaries in2012 after multiple legal actions in application of the that are liable to have or, during the last 12months have had, a
decision by the Commercial Court of Grenoble. However, this material effect on the financial position or profitability of the
decision, although provisionally executed, is subject to an appeal company and/or the Group.
to the Court of Appeals of Grenoble. In addition, a final decision on
41
2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC