By Nadya Masidlover 
 

PARIS--The Paris prosecutor's office has decided to open a preliminary investigation following the complaint filed by Hermes International SCA (RMS.FR) against LVMH Moet Hennessy Louis Vuitton SA (MC.FR, LVMUY) regarding tactics used by the larger luxury-goods company to accumulate a stake in Hermes.

"A preliminary investigation has been opened in order to assess the content of the complaint," an official at the Paris prosecutor's office said late Friday.

The investigation--which follows a complaint filed by Hermes in July for insider trading and share-price manipulation--is the latest episode in an ongoing battle between Hermes and its uninvited shareholder and larger rival, LVMH.

The row between the two luxury-goods purveyors dates back to October 2010, when LVMH revealed it had amassed as much as 17% of Hermes for a total of 1.45 billion euros ($1.8 billion). LVMH accumulated the stake using derivative instruments called equity swaps purchased from banks over a couple of years. In October 2010, it amended the equity-swap contracts to deliver shares instead of cash and in one fell swoop said it had passed various ownership thresholds that required public disclosure.

Write to Nadya Masidlover at nadya.masidlover@dowjones.com

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