Unilever 2009 Annual Report Download - page 125

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25 Commitments and contingent liabilities (continued)
Legal proceedings
Details of significant outstanding legal proceedings and ongoing regulatory investigations are as follows:
Competition investigations
As previously reported, in June 2008 the European Commission initiated an investigation into potential competition law infringements in the
European Union in relation to consumer detergents. Unilever has received a number of requests for information from the European Commission
regarding the investigation and has been subject to unannounced investigations at some of its premises. The investigation is ongoing although
no statement of objections against Unilever has been issued to date. It is too early to reliably assess the ultimate resolution or to estimate the
fines which the Commission will seek to impose on Unilever as a result of this investigation. Therefore no provision has been made. However,
substantial fines can be levied as a result of European Commission investigations. Fines imposed in other sectors for violations of competition
rules have amounted to hundreds of millions of euros.
In December 2009, Unilever received separate statements of objection from the French competition authority and from the Italian competition
authority in connection with investigations into certain product markets in France and Italy respectively. An earlier decision by the Greek authority
fining Unilever in relation to alleged restrictions on parallel trade within certain of its contracts with retailers in Greece is under appeal.
Appropriate provisions have been made in relation to these investigations and the fining decision.
In addition and as previously reported, Unilever is involved in a number of other ongoing investigations by national competition authorities.
These include investigations in Belgium, France, Germany and The Netherlands. These investigations are at various stages and concern a variety
of product markets. In several cases it is not clear that the authorities will seek to impose a fine on Unilever, and in others it is too early to be able
reasonably to assess the level of fines which the authorities may seek to impose.
It is Unilever’s policy to co-operate fully with the competition authorities in the context of all ongoing investigations. In addition, Unilever
reinforces and enhances its internal competition law compliance procedures on an ongoing basis.
Tax cases Brazil
During 2004 the Federal Supreme Court in Brazil (local acronym STF) announced a review of certain cases that it had previously decided in favour
of taxpayers. Because of this action, we established a provision in 2004 for the potential repayment of sales tax credits in the event that the cases
establishing precedents in our favour are reversed. Since that time we continue to monitor the situation and have made changes as appropriate
to the amount provided.
In June 2007, the Supreme Court ruled against the taxpayers in one of these cases. Industry associations (of which Unilever is a member)
attempted to negotiate a settlement with the Federal Revenue Service to reduce or avoid the payment of interest and/or penalties on such
amounts. On 3 December 2008 the negotiations resulted in the publication of a settlement by the Brazilian government, open to all taxpayers
including Unilever. This settlement was ratified by the President of Brazil in 2009 and was subsequently supported by further legislation which
increased the discount on the interest payable. Unilever made a payment on October 29th, 2009 to settle the claim and this matter is now
resolved.
Also during 2004 in Brazil, and in common with many other businesses operating in that country, one of our Brazilian subsidiaries received a
notice of infringement from the Federal Revenue Service. The notice alleges that a 2001 reorganisation of our local corporate structure was
undertaken without valid business purpose. The dispute is in court and if upheld, will result in a tax payment relating to years from 2001 to the
present day. The 2001 reorganisation was comparable with restructurings done by many companies in Brazil. We believe that the likelihood of a
successful challenge by the tax authorities is remote. While this view is supported by the opinion of outside counsel there can be no guarantee of
success in court.
Notes to the consolidated financial statements Unilever Group
122 Unilever Annual Report and Accounts 2009
Financial statements