Bernard Arnault to Sue French Newspaper

Luxury titan accuses Libération of public insult with its cover story.

PARIS — Bernard Arnault has his legal teams in overdrive.

This story first appeared in the September 11, 2012 issue of WWD.  Subscribe Today.

On Monday, the business titan said he would sue French Libération for public insult after it ran his image under the headline “Casse-toi riche con!” — whose most polite translation is “Get Lost Rich Idiot!”

The image from 2000 depicts the executive smiling broadly as he stands in front of a painting by Mark Rothko with his right hand clutching a glossy Louis Vuitton suitcase. And Libération is doing it again today, when the French paper plans to run a headline on Arnault that reads: “Bernard, si tu reviens, on annule tout,” or “Bernard, if you come back, we cancel everything” in English.

This a reference to a text message that former French president Nicolas Sarkozy was reported to have sent to his ex-wife Cécila in 2008, a few days before his wedding to Carla Bruni. Ironically, Yves Saint Laurent, part of PPR, is advertising on the front page of today’s Libération.

The French TV i-télé reported that Arnault’s lawyer is asking for damages and interest between 15,000 euros and 20,000 euros, or between $19,219 and $25,626 at current exchange rates, as well as the publication of the justice’s decision on the front page of Libération.

France’s richest man and chairman and chief executive officer of LVMH Moët Hennessy Louis Vuitton has become the poster boy for a heated polemic in France over the new Socialist government of President François Hollande’s plan to impose a 75 percent tax rate on incomes of more than 1 million euros, or $1.3 million at current exchange.

Arnault called the page one of the left-leaning tabloid newspaper “unacceptable” and said its coverage, splashed over four inside pages, reveals an antibusiness sentiment that is counter to what is needed to improve France’s ailing economy and swelling unemployment.

RELATED STORY: Bernard Arnault Denies Belgium Move >>

It’s Arnault’s second high-profile action headed for the French courts.

Earlier this month, he said LVMH would file suit against Hermès for “slander, blackmail and unfair competition,” escalating an ongoing dispute regarding LVMH’s acquisition of a 22.3 percent stake in the maker of Birkin bags and silk scarves.

That legal move was in response to a complaint Hermès lodged with a Paris court against LVMH, accusing the firm of insider trading, collusion and manipulating stock prices.

Monday’s suit came the morning after Hollande, in a televised interview to discuss the country’s ailing economy and his sliding approval ratings, scolded Arnault, who on Saturday acknowledged he has applied for dual French-Belgian citizenship, while stressing that he “is and will remain” a fiscal resident of France.

During the program, Hollande confirmed he would introduce the controversial supertax as one measure to reduce France’s budget deficit, and he suggested Arnault should display more patriotism.

Libération’s headline Monday was a play on what France’s former Conservative president Sarkozy famously said during a visit to an agricultural trade show in 2008. When an attendee there didn’t want to shake the president’s hand, Sarkozy retorted: “Casse toi, alors pauvre con!” (or “Then get lost, you bloody idiot!”) Pauvre is also the French word for poor.

Over the weekend, Arnault said he is seeking a Belgian passport as he has numerous personal and business ties to the country, including several investments via his private holding Groupe Arnault. Dual citizenship would not change his tax status, nor “his determination to continue developing the LVMH group and creating jobs” in France.

Arnault noted Monday that he has created more than 20,000 jobs in France and protected precious know-how and patrimony, all the while paying his taxes in the country for more than 20 years.

Libération does cover fashion, and a recent issue of its glossy weekend magazine, Next, included advertising pages from Dior Homme, Kenzo and Dior perfume, all brands controlled by Arnault.

According to Vincent Tolédano, a French lawyer specializing in privacy rights and media-related litigation, it’s not yet known what sort of case Arnault might file. If it is civil, for instance, Libération could have to pay damages and interest.

“It will be difficult to settle. I won’t make predictions,” continued Tolédano. “Would the judges retain the humorist and parodic nature of this expression borrowed from Nicolas Sarkozy? Or, in the inverse, would they consider that freedom of the press, humor and the right to provoke — which is even recognized by the European Court of Human Rights — is not allowed to go that far? Has the line been crossed?”

The Socialist government, the first in France in 17 years, has been on a collision course with the country’s business elite since it took power in June. The fashion industry is in its crosshairs as France’s wealthiest families also include the majority owners of L’Oréal, PPR, Hermès and Chanel.

Last week, Arnault had a 40-minute meeting with France’s prime minister, Jean-Marc Ayrault, to discuss the general economic situation, and it is believed the wealth tax was addressed.

In recent years, scores of wealthy French have fled to countries like Switzerland and Belgium to escape already high taxes in France.

“There’s already been a pretty steady flow of highly paid financial executives from Paris to London. We’ve already got around 400,000 French people living in London,” said George Wallace, ceo of London-based retail consultancy MHE Retail. “Luxury goods firms, however, are rooted in their domestic economy. If you’re Louis Vuitton, you’ve got to be based in France; if you’re Hugo Boss, you’ve got to be based in Germany. But it might be harder for those companies [in France] to attract talent. If Louis Vuitton wants to attract the best talent in the luxury goods industry [an executive] is going to have to think twice about being domiciled there, unless they have some sort of expat tax arrangement. For people interested in money, [the new tax measures] sends out the message that France is going down a socialist route.”

A Belgian newspaper, La Libre Belgique, broke the news about Arnault’s quest for citizenship and quoted an official saying his is but one among 47,000 applications it is processing.

In France, the Arnault-Socialist face-off dominated daily newspapers, including La Tribune and Le Monde.

Separately on Monday, the SNJ-CGT union representing journalists published a statement titled “Bernard Arnault, Media Owner: News in Danger.” In it, the organization writes: “The SNJ-CGT would like to point out to Bernard Arnault and to the government that LVMH group’s activities in the media benefit from multiple aids to the media, public money. (His other activities in the luxury business benefit from public aid, as well.) Is Mr. Arnault ready to exile his media activities in Belgium in order not to depend on public subsidies?”

LVMH owns media holdings such as Les Echos, Série Limitée, Investir, Connaissance des Arts and Classica.

The SNJ-CGT ended its statement by saying it “continues to advocate strongly for the independence of publications from their shareholders; it is urgent in groups such as Bernard Arnault’s. It requires also that aid to the media be forbidden to publications owned by groups such as LVMH.”