UPDATE 1-French court annuls Bollore-Canal+ deal on TV channel

Mon Dec 23, 2013 11:11am EST

* Canal+ says ruling doesn't bring transaction into question

* Canal+ to restart talks with authorities to resolve issues (Adds Canal+ comment, detail, background)

By Gwénaëlle Barzic

PARIS, Dec 23 (Reuters) - France's highest administrative court overturned the regulatory approval of the sale of Bollore's Direct 8 TV channel to Vivendi-owned Canal+ , citing a procedural flaw and antitrust grounds.

French regulators will now have until July 1 to reexamine the transaction and come up with fresh conditions to safeguard competition, the Council of State said in a statement on Monday.

The sale of Direct 8 to pay-TV operator Canal+ for around 279 million euros ($381 million) in Vivendi shares was validated by France's competition authority in September 2012, but was challenged by broadcasters TF1 and M6.

The two rivals were keen to ensure the enlarged Canal+ group, now active in both pay and free television, did not have an unfair advantage when negotiating TV rights with film producers and sports federations.

The Council of State said the competition authority had erred by not bringing together a committee of its members for a review of commitments presented to resolve issues raised in a first examination of the dossier.

The administrative court also pointed to issues around the rebroadcast of French films for free.

Canal+ said on Monday that the latest ruling did not bring the transaction into question, adding that there would be no immediate impact on programmes on its D8 and D17 channels.

The group said it planned to start fresh talks with the relevant authorities as soon as possible to resolve the issues raised by the Council of State.

The competition authority, TF1 and M6 declined to comment. ($1 = 0.7315 euros) (Additional reporting by Natalie Huet; Editing by Leigh Thomas and Louise Heavens)