FRANCE: Friend or Foe - John Tylee charts the history between one-time lunch partners Maurice Levy and Alain de Pouzilhac and the fortunes of Publicis and Havas

The rivalry between Havas and Publicis, France's two great advertising powerhouses, is like an underground river running constant and deep but whose wellspring is almost impossible to trace.

Is it to be found in the late 20s in two rooms above a delicatessen in Faubourg Montmartre where a novice, but mercurial, advertising man called Marcel Bleustein-Blanchet was already baulking at paying the already powerful Havas to place the ads created by his fledgling Publicis and pledged himself to beat it at its own game?

Was it forged during the Nazi occupation and the events which still trouble the national collective conscience? While Havas was serving as propagandist for the puppet government in Vichy, Bleustein-Blanchet was identifying himself with the Resistance, fleeing to London to escape the Gestapo and becoming an aide to De Gaulle.

Maybe it's been exacerbated by the cultures born of their respective histories - Havas, a one-time nationalised body, institutional and much favoured by the French political establishment and leaders such as Francois Mitterand and Lionel Jospin, a symbol of national pride with a shareholding structure once so deliberately complex as to render it almost takeover-proof; Publicis, family controlled, creative and entrepreneurial but, until recent years, rarely in the frame for government work.

Does it go back to the late 70s when Havas audaciously bought a 10 per cent stake in its rival, sparking fears that the group had a gameplan for when the septuagenarian Bleustein-Blanchet died? The very-much-alive Publicis chief forced Havas to sell it back.

And does it linger in the distance that Maurice Levy, the headline-grabbing Publicis chairman, and Alain de Pouzilhac, his more low-profile Havas counterpart and one-time Publicis staffer, keep between themselves?

Their meetings are restricted to industry social functions, they have lunched only once in four years and Levy's associates have witnessed their boss' mischievious chuckle when switching on his office TV to find the Publicis share price outperforming that of Havas.

Levy acknowledges the chasm but claims it's a necessary barrier. "Alain isn't a friend because it's very difficult for friends to steal business from each other, he says. "He is a ferocious defender of his brand, as I am of mine, and I respect him for it."

Some actually suggest the rivalry is more imagined than real. Jean de Yturbe, the Paris-based former chairman of the Bates European network and now the Cordiant group's deputy chief, claims it exists only because the two groups are French advertising's dominant forces which find themselves pitted against each other almost daily.

Certainly, any friction between them is nothing when compared with the vituperation that Levy and de Pouzilhac reserve for foreign adversaries who they perceive not only to have tried to thwart their international ambitions but, quelle horreur, to have acted less than honourably.

Levy's bete noire is Bruce Mason, the former chairman of True North, the one-time global partner of Publicis until their alliance collapsed amid deep mutual mistrust. Levy accused Mason of treating Publicis like Third Worlders although their confrontation taught him valuable lessons in understanding the mindsets of powerful US advertisers and their agencies.

The object of de Pouzilhac's disaffection is Sir Martin Sorrell and stems from the tug-of-war between Havas and WPP's group chief executive for control of the UK media buying operation Tempus. Havas withdrew its £425 million bid last summer, having been trumped by Sorrell who hoped his counter-bid would force Havas into paying too much. "We do not share the same values, an embittered de Pouzilhac was recently quoted as saying. "For me he doesn't exist."

A case of Gallic chips showing? Perhaps more a reaction to cathartic and - maybe - defining experiences in the global evolution of both groups.

For its part, Publicis seems to have emerged the stronger for its bruising experience with True North. Because the family owned group didn't want to see its ownership diluted, the international expansion of Publicis has been the slowest of the two groups.

Under Levy, however, it has proved an astonishing late developer, snapping up Saatchi & Saatchi and Bcom3, the holding company for D'Arcy and Leo Burnett. The deals not only secure its place within a consolidating communications world but put clear water between itself and its rival.

"In terms of ambition, panache and style, Publicis has it over Havas," Bob Willott, the editor of the industry newsletter Marketing Financial Intelligence, says. "In terms of scale and stature Publicis is streets ahead. You have to take your hat off to it. A Havas source is even more candid. "Maurice has really slam-dunked us."

That may be a tad too pessimistic. Publicis is new to this kind of global deal-making which has been personally driven by Levy. What's more, he has paid enormous sums for its latest acquisitions and must ensure the profits justify the outlay. As de Yturbe points out: "You become exposed when you make acquisitions of this kind. If you don't do them, your mistakes are limited."

For Havas, the Tempus affair may have forced some serious stocktaking.

Willott believes the failure to pull off the deal has raised questions about Havas' financial and strategic clout. "The company has never had the degree of imagination to engineer deals which appeal to shareholders and allow flexibility without being overburdened with debt, Willott comments.

Moreover, Havas without Tempus merely highlights media as the group's major weakness - it is having to make good the deficiency with local acquisitions.

Some industry observers also question whether, in Euro RSCG and Arnold Worldwide Partners, Havas has the quality agency brands to match those in the Publicis stable.

The debate now centres on where Havas, which has axed hundreds of jobs and suffered an 8.1 per cent drop in ad revenues in the first quarter of the year, should go. Willott suggests it sticks to its knitting and concentrates on making its existing businesses better. Others believe there's a more fundamental question to be confronted.

"Havas has to make up its mind whether it wants to be bought or continue buying, a senior executive at a Havas-owned agency says.

Insiders don't rule out the possibility of what, at least, would give the appearance of a "spectacular", namely a three-way deal involving Havas, Cordiant and Grey with Procter & Gamble, a current client of two of the three parties, providing the glue.

"I think de Pouzilhac will do something to get back in the ballpark with Publicis, a Havas source opines.

"His ego won't allow him to settle for anything less."

THE RIVALS' HISTORY

1992 Publicis creates BMZ, a new network operating in Germany, France, the UK, Belgium, the Netherlands and Italy.

1993 Publicis acquires FCA, the fourth-largest communications group in France, then merges FCA and BMZ to create FCA!BMZ, a subsidiary operating in 12 European countries.

1994 Publicis merges Bloom, the US subsidiary of FCA, to boost its US presence.

1995 Publicis discontinues its alliance with FCA due to strategic divergences with True North Communications, FCB's parent company.

1996 Euro RSCG Worldwide becomes Havas Advertising and restructures into four divisions: Euro RSCG, Campus, Mediapolis and Diversified Agencies. Publicis starts to expand outside of Europe.

1997 Havas transfers its Euro RSCG Worldwide head office to New York. Maurice Levy makes a bid for True North, trying to scupper True North's purchase of Bozell, Jacobs, Kenyon and Eckhardt. Levy and True North boss Bruce Mason bicker until Mason prevails to win BJK&E.

1999 Havas merges its media functions with the launch of Media Planning Group.

2000 Publicis buys Saatchi & Saatchi for $1.8 billion after a string of heavyweight acquisitions in the US, and in the process leaps from being the tenth-largest communications group to being the sixth largest.

2001 Havas Advertising buys the remaining 55 per cent stake in MPG.

2002 Publicis announces its intent to acquire Bcom3. Dentsu will have a significant minority stake in what will become the world's fourth-largest marketing communications company. Havas Advertising becomes Havas.

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