LVMH drops Hermes fine appeal


The company will not appeal a €8m fine from the French financial authorities

LVMH will not appeal a €8m fine from the French financial authorities, Autorité des marchés financiers (AMF), for not declaring its stake building in arch rival Hermès.

AMF slapped the fine on LVMH earlier in the summer. LVMH boss Bernard Arnault has assiduously built up positions in fashion house Hermès since 2002. Currently he controls 23.1% of the company and was greatly helped by equity swaps, a financial instrument that legitimately can be used to avoid disclosing direct ownership information.

The obfuscation meant LVMH, owner of more than 50 brands including Dior, Givenchy and Guerlain, was not obliged to reveal its position in Hermès. Defending its response to the AMF fine, LVMH said: “AMF expressly confirmed that in acquiring its equity stake in Hermès, LVMH never breached regulations regarding ownership thresholds or engaged in insider trading or market manipulation.” Hermès has not commented on LVMH’s decision.

However the LVMH-Hermès synergies, as far as Arnault, a brilliant strategist, is concerned, remain clear. Particularly with LVMH-owned Vuitton. So far the Hermès family remain united in their bulwark against Arnault. Hermès is also additionally protected by its limited partnership structure, which enables members of the Hermès family – made up of three different families including the Guerrands, Puechs and Dumases – to trade shares between themselves.

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The arrangement, which has been approved by the AMF, has come under criticism from other minority shareholders who complain that the lock-up is unfair.