PARIS / LONDON (IT BOLTWISE) – Despite significant EU penalties for price fixing, the luxury group LVMH is showing impressive financial success. The company’s shares rose by more than twelve percent, while the penalties for subsidiaries like Loewe are only perceived as a footnote. These developments raise questions about the moral responsibility of the luxury industry.
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The luxury industry is once again in the spotlight after LVMH reported impressive quarterly results despite significant EU fines for price fixing. While other companies would have to expect a fall in share price under similar circumstances, LVMH shares experienced an increase of over twelve percent. This illustrates the continued appeal of luxury brands to investors who are hardly deterred by legal misconduct.
The EU Commission had imposed high penalties on several fashion houses, including the LVMH subsidiary Loewe. These were imposed due to years of price agreements in which sales partners were prohibited from deviating from recommended sales prices. Such practices, which lasted from 2015 to 2023, were only uncovered through unannounced raids in Italy, Spain and France. The Commission sees these as a clear breach of EU competition law as they lead to higher prices and less choice for consumers.
Interestingly, the affected brands have admitted their violations and stopped the practices. Through their cooperation, they were able to significantly reduce the penalties. Gucci and Loewe benefited from a 50 percent reduction, while Chloé received a 15 percent reduction. Nevertheless, the financial damage to LVMH remains manageable, as the penalties only represent a fraction of what the group gains in market value on a good trading day.
Investors’ reaction to these developments is indicative of the state of the luxury industry. The LVMH brand appears to be untouchable, even when legal misconduct becomes public. Profit, growth and the symbolic power of the brand are crucial. LVMH’s latest quarterly figures underline this with strong margins, record sales and continued high demand for luxury items in the US and Asia.
However, these events also raise an uncomfortable question: How far can luxury go in order to remain exclusive? The artificial price stability that the EU investigators now want to dismantle was ultimately part of the DNA of these brands. But if exclusivity means circumventing consumer rights, the business model threatens to collapse. The moral conflict between price sovereignty and competition will continue to plague the industry for a long time.
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