PSA - 2019 Universal Registration Document

CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 Notes to the Consolidated Financial Statements at 31 December 2019

OFF-BALANCE SHEET COMMITMENTS AND CONTINGENT NOTE 17 LIABILITIES

Off-balance sheet commitments given in thenormal course of business were asfollows at31 December2019:

31 December 2019

31 December 2018

31 December 2017

Notes

(in million euros)

Financing commitments > Operating commitments >

12.8 8.4

901

838

884

1,717

3,169

3,346 4,230

Manufacturing and sales companies

2,618

4,007

Finance companies

16

-

12

13.6

In 2019, the decrease in operatingcommitmentsresults from the effectof the application of IFRS 16 Leases (seeNote 2.2and2.3).

copiedrecording”underthe statute’sdefinitions.The DistrictCourt enteredfinal judgmentin favorof Clarionand the otherdefendants and there are no additional claims against Clarion that remain pending at the District Court level. AARC appealed the District Court’s summaryjudgmentopinion to the United States Court of Appealsfor the Districtof ColumbiaCircuit(“D.C.Circuit”)on similar grounds argued at the District Court. On 28 January 2020, the D.C. Circuit’s three-judge panel unanimouslyaffirmed the District Court’s summary judgment in Clarion’sfavor,rulingthat automakersandmanufacturersof certain onboard vehicle systems (which include Clarion’s systems), comprisedof hard drives, computer programmesand databases, were not liable for damagesor royaltypaymentsunder the Audio HomeRecordingAct of 1992, 17 U.S.C. §1001, et. seq . Plaintiffsmay petitionthe D.C. Court for rehearingor requestan appealfrom the U.S. SupremeCourt. There are no other claims or litigationin progressor pendingthat are likely to have a material impact on the Group’s consolidated financial position. Automotive business The customs agreement governing the automotive industry betweenBrazilandArgentinaprovidesfor the paymentof penalties by the Argentineautomotiveindustryshould the averageratio of importsto exportsvis-à-visBrazil exceeda certain thresholdover the 2015–2029 period. Penalties may be payable by the Group shouldthe automotive industryas a wholeandtheGroupnot hit the required ratio. No provision has been funded due to the uncertaintiessurroundingdevelopments in the automotivemarkets in Argentinaand Brazil betweennow and 2029 and the steps that the Groupcould take. Representations andwarrantiesweremadeto JSCRussianRailways (RZD) as part of its acquisitionof the GEFCOGroup from PSA in December 2012.At 31 December2019, the Grouphad not identified any material risks associated with these representations and warranties. Under the logisticsand transportationserviceagreementsentered into by the PSA and GEFCO groups, the Group gave guarantees regarding the satisfactoryperformanceof the logistics contracts and a five-year exclusivity clause. An amendment signed in November 2016supplementedthese logistics and transportation service agreements.This amendment,which came into effect on 1 January2017, extendsthe exclusivityclause until the end of 2021 and confirms the guarantees regarding the satisfactory performanceof the logistics contracts given by PSA Group. At 31 December2019, the Group had not identifiedany materialrisks associatedwiththeseguarantees. COMMITMENTS CONNECTED 17.2. WITH THE GEFCO GROUP

CONTINGENT LIABILITIES 17.1. Automotive equipment

On 25 March2014,the EuropeanCommissionand the UnitedStates Department of Justice, on 27 November 2014, the Competition Commission of South Africa, and on 19 May 2017, the Brazilian competitionauthority(CADE),initiatedan inquirycoveringcertain suppliersof emissioncontrolsystemson the basis for suspicionsof anti-competitivepractices in this market. Faurecia is one of the companiescoveredby these inquiries. On the statusof these inquiries: The European Commission has decided on 28 April 2017 to n terminate the investigation initiated on 25 March2014; An agreementhas beenreachedwiththe CADEandmadepublic n on 5 September 2018 putting an end to the inquiry on Faurecia; In December 2018,Faurecia has been informed by the United n States Departmentof Justicethat it was no more subjectto an inquiry; The inquiryof the CompetitionCommissionof SouthAfricais still n ongoing. Faureciahas reached agreements,for non-materialamounts,with the plaintiffsto settle all three class actionswhichwere filed in the United States District Court for the Eastern District of Michigan against several suppliers of emissions control systems, including group affiliates, alleging anticompetitivepractices in regard to Exhaust Systems. These agreementshave been validated by the court. Two class actions for similar allegations have also been filed in Canada butare at averypreliminary stage. The consequences of still on-going procedures and above mentioned can not be predicted. Therefore, no accruals were accounted foras of 31 December 2019. In 2014, the Alliance of Artists and Recording Companies, Inc. (AARC) filed two consolidatedcases in the United States District Court for the District of Columbia seeking damages and an injunction against a group of automotive manufacturers and suppliers,includingClarion Corporationof America.AARC alleged that the defendantswere distributingin-vehiclenavigationsystems in violation of the Audio Home Recording Act of 1992, in part, because no royalties were paid pursuant to the Act. The case centers on whether the systems are “digital audio recording devices” that are capable of making “digital audio copied recordings”as definedby the statute.On 23 March2018,theDistrict Court issued summaryjudgmentin favor of Clarionand ruled that Clarion’s navigation systems are not “digital audio recording devices”becausethey are not capableof producinga “digitalaudio

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PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT