French media and telecoms company Vivendi is using anti-racketeering legislation to sue Deutsche Telekom in the US. The move is the latest twist in a long-running legal battle.
The two companies are fighting over control of a Polish telecoms firm, Polska Telefonia Cyfrowa (PTC). The firms are joint venture partners in PTC but Vivendi claims that Duetsche conspired with a Polish investor to take control of the company.
Vivendi says that Deutsche violated the Racketeer Influenced and Corrupt Organizations Act (RICO), a law designed to tackle organised crime. Vivendi is making a $7.5 billion claim to recoup the $2.5 billion it says it invested in PTC. The RICO Act allows for damages claims to be made to triple the value of any loss.
PTC is a valuable property. It is Poland's largest mobile phone network with a 35% market share, according to research firm IDC. The mobile market is an expanding one which grew 23% last year.
Vivendi accuses Deutsche of conspiring with a Polish investor, Elektrim, to gain control of PTC. Elektrim had been a partner company of Vivendi when it bought a 51% stake in PTC, in which Deutsche already had a 49% stake.
Vivendi says that Elektrim then worked with Deutsche to take control of the company. Deutsche did take over management of the company in June this year following a ruling from an arbiter in Vienna.
The case has already been heard in European courts and by arbiters, and Deutsche says that Vivendi's pursuit of it in a US court is "absurd and desperate". "[Vivendi] is repeating old accusations with which it has been unsuccessful before European courts in Poland and Austria as well as an international court of arbitration," a Deutsche spokesman told The New York Times.
Vivendi says that a US hearing is appropriate because it believes that phone networks in the US carried email messages that formed part of what it calls an organised scheme to defraud the company.
Though the RICO legislation was designed for use against organised criminals, it has been used in technology cases before. A mother in the US used the law to attack the music industry group the Recording Industry Association of America over that body's lawsuits against alleged file-sharers. Michele Scimeca argued that the body's behaviour amounted to extortion.
Two ISPs – giant Earthlink and the much smaller CIS Internet Services – have brought actions against alleged spammers using the RICO Act.