(Combines stories, adds background)
By Jonas Ekblom and Elvira Pollina
BRUSSELS/MILAN, Dec 18 (Reuters) - An Italian law that forced Vivendi to freeze two-thirds of its stake in Italian broadcaster Mediaset breaches European Union rules, the EU Advocate General said on Wednesday.
The EU Advocate General's opinion is not binding but it could strengthen Vivendi's hand in a legal dispute with Mediaset, the broadcaster controlled by the family of former Italian Prime Minister Silvio Berlusconi.
Vivendi and Mediaset have been embroiled in the dispute since the French conglomerate withdrew from an 800 million euro ($881.76 million) deal to buy Mediaset's TV unit in 2016 and later built up a hostile 28.8% stake in the Italian broadcaster. Vivendi is also a major shareholder in Telecom Italia.
Italy's communications watchdog ruled in 2017 that Vivendi's stakes in Mediaset and Telecom Italia broke rules designed to prevent a concentration of power in the telecoms and media sectors and ordered it to reduce one of its stakes to below 10%.
To comply, Vivendi transferred two-thirds of its voting rights in Mediaset into an arms-length trust, which has been barred from voting at the Italian broadcaster's shareholder meetings.
The opinion of the advocate general, who is an adviser to the European Court of Justice, could help Vivendi get back voting rights on its full stake in Mediaset should the EU court follow the advice.
Manuel Campos Sanchez-Bordona, advocate general to the EU court, said national legislation could prevent ownership being too concentrated but said such laws must be proportionate.
He said an Italian court would decide if the law was proportionate but the legislation had defined the communications sector too restrictively, setting a very low ceiling for revenues controlled by one company.
He also said Vivendi was not in a position to exert considerable influence on Mediaset.
A spokesman for Vivendi said the company was very satisfied with the advocate general's opinion.
Mediaset said in a statement that pending a decision from EU and Italian courts, Vivendi's stake remained illegitimate.
The European Court's judges are not obliged to follow the advocate general's opinions but usually they do. They would normally rule in two to four months after such an opinion is given.
Vivendi had challenged Italy's communications regulator's decision on its Mediaset and Telecom Italia stakes in an Italian court, which referred the case to the EU court.
$1 = 0.9073 euros Reporting by Jonas Ekblom in BRUSSELS, Elvira Pollina in MILAN; Editing by Philip Blenkinsop/Edmund Blair/Jane Merriman