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LVMH fined £6.8m for Hermès share purchases

Luxury label Louis Vuitton Moet Hennessy has been fined E8m (£6.8m) by France’s market regulator for not disclosing its intention to build up a significant stake in rival design house Hermès.

The AMF said Monday (July 1) that LVMH was too slow in revealing its stake, which was built by using foreign subsidiaries. Large transactions are supposed to be disclosed quickly as they can affect share prices.

LVMH raised its stake in Hermès to 14.2% in 2010 has since increased its holding in the company to 22.3%.  

Hermès filed a criminal complaint against LVMH last year, accusing its rival of insider trading, manipulating share prices and dissimulating its investment in the company.

LVMH in turn filed a suit against Hermès for slander, blackmail and unfair competition.

Following the ruling, LVMH said it would refer the matter to the Paris Court of Appeals as soon as possible.

The AMF’s investigation, launched in November 2010, suggested LVMH began building its stake in Hermès in 2001 via various offshore subsidiaries.

Hermès executives have repeatedly urged LVMH to reduce its shareholding.

Last year, Hermès put family-owned shares into a non-listed holding company to guard it against further advances by LVMH. The Dumas, Puech and Guerrand families collectively own more than 70% of the shares in Hermès, a limited partnership structure that guarantees they keep control of management.

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