By Elvira Pollina and Mathieu Rosemain
MILAN/PARIS (Reuters) - An Italian judge will decide on Vivendi's <VIV.PA> request to block Mediaset's <MS.MI> pan-European television project after the two groups failed to settle their long-running dispute, a legal source said on Friday.
The case has become a tussle between billionaires over the future of European TV as competition grows from streaming services from the likes of Netflix <NFLX.O> and Amazon <AMZN.O>.
Mediaset is backed by the family of former Italian Prime Minister Silvio Berlusconi while its 29% shareholder Vivendi <VIV.PA> is led by Vincent Bollore.
The two groups, locked in a whole series of legal arguments, have clashed over the Italian group's plans to create a pan-European TV champion through Dutch-based holding MediaForEurope (MFE).
Mediaset aims to use the MFE platform to build TV alliances in Europe to help it compete with streaming services and has built a 15% stake in Germany's ProSiebenSat.1 <PSMGn.DE>.
Vivendi, which has its owns plans to create a southern European media force, says governance plans at MFE would give Berlusconi too much power and hurt minority shareholders.
A deal between the two sides would free Mediaset's hand to press ahead with merging its Italian and Spanish units, folding them into the Dutch holding.
A Milan judge earlier this month gave the companies until Nov. 29 to settle their disagreements over MFE after earlier attempts to reach an accord failed.
However, overnight talks did not produce a breakthrough and the two sides faced off in court. The judge must now set a date for a new hearing to discuss Vivendi's request to suspend the MFE operation.
"Despite strenuous efforts, attempts at conciliation promoted by the Court of Milan...have failed," Mediaset said in a statement. Vivendi declined to comment.
The two sides have been holding talks to try to find a way to settle not just the MFE case but all their outstanding issues.
According to sources, a deal being worked on between the two could see Vivendi sell around two thirds of its stake in Mediaset to MFE but differences over price and other terms such as a standstill agreement that would have prevented Vivendi from buying back MFE shares have held things up.
Negotiations could resume but the talks have been hampered by a deep mistrust between the two sides.
Mediaset and Vivendi, owner of pay TV group Canal+ and Universal Music Group, have been embroiled in a protracted dispute since a failed pay TV deal in 2016.
Vivendi is also the top shareholder in Italian phone incumbent Telecom Italia <TLIT.MI>.
(Reporting by Elvira Pollina in Milan and Gwenaelle Barzic in Paris; writing by Stephen Jewkes; editing by Jason Neely, Kirsten Donovan)