MILAN (Reuters) - A Milan judge gave Italian broadcaster Mediaset MS.MI and its shareholder Vivendi another week to settle a dispute over plans for a Dutch-based holding to drive Mediaset's European growth, potentially opening the way to ending a three-year legal battle.

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After attempts to reach an accord ahead of the hearing on Friday failed, the two groups agreed to ask the judge for a week’s extension in a bid to iron out remaining differences, a sign taken by lawyers to indicate an agreement was possible.

Vivendi VIV.PA, Mediaset's second-biggest shareholder had challenged the pan-Europe TV plan in court, asking the judge to suspend the deal, which it fears would hand too much control to Mediaset's main shareholder, Fininvest, the holding company of former Prime Minister Silvio Berlusconi.

Failure to reach a deal over its pan-European plan could complicate Mediaset's efforts to tackle increasing competition from streaming services such as Netflix NFLX.O and Amazon Prime AMZN.O.

Following a board meeting on Friday, Mediaset said plans for the new Dutch holding, dubbed MediaForEurope (MFE), were a strategic priority and would go ahead.

In a sign it still hoped for a resolution, it said a special shareholder meeting would be held on Jan. 10 to vote on a number of proposed amendments to the project that it hoped could break the deadlock.

“By acting this way ... the Board of Directors hope to gather the approval also by those shareholders who have elected to oppose the MFE Project,” it said in a statement.

Mediaset’s corporate reorganisation was put on hold last month by a Spanish court, following a request by Vivendi, which filed a similar request in Milan.

The dispute over the MFE project is only one of a number of issues between the two groups, which have been embroiled in a protracted dispute stemming from a failed pay TV deal in 2016.

After pulling out of a deal to acquire Mediaset’s loss-making pay TV division, Vivendi built up a stake in the Italian group, a move Mediaset has always considered hostile.

Over the past two weeks, Mediaset and Vivendi have been holding talks to try to find a way to settle all the outstanding issues. Under a settlement, Vivendi could sell back around two thirds of its 29% holding in Mediaset but the two sides have been held up by differences over price and other terms.

Mediaset has offered Vivendi 2.77 euros to repurchase shares but a spokesman for the French group said no agreement on price had been reached.

A source on Thursday said Vivendi was prepared to sell the 20% Mediaset stake held by its Simon Fiduciaria trustee at a price of 3.25 euros each, below the 3.7 euros paid three years ago to build the stake.

Mediaset shares closed 1.64% higher at 2.7 euros.