LVMH, L’Oreal Lose Ruling on $62 Million French Fine

Posted on November 24, 2010 @ 09:04 am

Bloomberg reports that LVMH Moet Hennessy Louis Vuitton SA and L’Oreal SA were among 15 perfume makers and retailers ordered by France’s highest appeals court to pay a 46.2 million-euro ($62 million) price-fixing fine levied in 2006.

The Cour de Cassation restored the regulator’s fine for “hardcore restrictions” on competition and ordered the Paris appeals court to rehear the case, saying the lower body erred in dismissing the penalty based on the age of the evidence.

“In rejecting the claims declared and upheld by the report, without studying the merit of these claims and means of defense to counter them, the appeals court violated the commercial and civil code," the Cour de Cassation said, referring to the regulator’s report on its findings.

The decision is a victory for the French Competition Authority, which has had at least four decisions overturned or reduced this year on appeal. The Paris appeals court cut a record 575.4 million-euro fine against steelmakers and brokers in January by 87 percent, and in February, the Cour de Cassation said the regulator had been wrong to suspend France Telecom SA’s exclusive iPhone contract with Apple Inc.

Luxury perfume makers collaborated with retailers to set a “recommended retail price” and maximum discount from 1997 to 2000, the competition regulator said. The agreements were enforced with a “pricing control system,” the regulator said in its statement announcing the original fine.

L’Oreal said in a statement that the company didn’t take part in any price fixing agreement. LVMH, the largest luxury-goods manufacturer, didn’t immediately comment on the ruling. The regulator repaid the perfume companies after the lower court ruling.