PARIS, July 9 (Reuters) - In the touristy Saint-Ouen

flea market, not far from the Stade de France where athletes

will compete in this summer's Paris Olympics, police officers

swarmed in at dawn on April 3 and shut down 11 stores selling

counterfeit bags and shoes.

They confiscated 63,000 items of clothing, shoes and leather

goods, including fake Louis Vuitton and Nike ( NKE ) products,

and threw them into garbage compactor trucks on the spot. Ten

people were arrested.

Michel Lavaud, police security chief for the

Seine-Saint-Denis suburb that will host Paris 2024 athletics and

swimming events as well as the closing ceremony, described the

operation as part of a pre-Olympics crackdown on knockoffs.

Fake fashion is big business. Counterfeit branded clothing

alone is estimated to have cost companies in France 1.7 billion

euros ($1.83 billion) in lost sales on average each year between

2018 and 2021, according to the European Union Intellectual

Property Office.

"We've been talking about the problem of counterfeits for the

last two years," Lavaud said, adding the police was looking to

intensify its efforts. The raid in the world's fashion capital

bears some similarity to clean-ups carried out by previous

Olympic hosts like Beijing in 2008, which had mixed results, as

well as London in 2012 and Rio in 2016.

But the police crackdown on street merchants in

Seine-Saint-Denis, where one in three lives in poverty according

to French national statistics, has drawn criticism for pushing

people already in economically precarious situations into

further difficulty.

Axel Wilmort, a researcher with French social science institute

for urban studies LAVUE, said he had noticed a sharp increase in

police presence and repression of informal market sellers on the

outskirts of Paris over the last three months, with frequent

police patrols and the installation of metal barriers preventing

vendors from setting up stalls.

"There is a will to erase all signs of precarity, poverty and

undesirables," he said, adding that law enforcement officers

often do not differentiate between counterfeit sellers and

vendors of legal second-hand wares.

Police in Paris did not respond to a request for comment.

Police raids on informal merchants near Paris' iconic

Montmartre hillside have multiplied since February, with

10 carried out over four days in early June to dismantle a

market of around 1,000 sellers, according to a letter, seen by

Reuters, from the district mayor to the interior minister.

Seventy tonnes of products were destroyed in March alone, the

letter said.

Reuters documented in April how street vendors have been caught

up in a vast police operation aimed at ridding deprived Paris

suburbs of petty crime before the Games.

LUCRATIVE GAME

The roughly 15 million visitors expected to attend the Olympics

in Paris - a magnet for luxury goods shoppers - are a tempting

target for sellers of fake designer items.

Sensing a threat to branded merchandise, Paris 2024 organizers

and the International Olympic Committee both became members of

French intellectual property protection association UNIFAB last

year. The organisation works with brands to raise awareness

around the risks linked to fake products, which often breach

safety regulations and help fund illegal activities.

"We've been working a lot ahead of the Olympic Games," said

UNIFAB's CEO Delphine Sarfati-Sobreira.

Paris 2024 sponsor LVMH, the world's biggest luxury

conglomerate, is a prominent member. LVMH did not respond to a

request for comment on the recent anti-counterfeit measures. The

company has said it works closely with authorities and customs

officials to enforce its intellectual property rights and to

defend consumers from counterfeiters.

France had already dialled up its fight against fakes. Last

year, customs seized 20.5 million counterfeit products, a 78%

increase on the 11.5 million confiscated in 2022, according to

data released in May.

This spring, UNIFAB helped train 1,200 customs agents to

verify the authenticity of Olympics merchandise, with the red

Paris 2024 mascot and clothing the most likely target for

illegal replicas, according to officials. French authorities

also have 70 agents fighting counterfeits online, looking to

dismantle local and international criminal networks.

"Paris doesn't want to be known as the counterfeit capital of

Europe," said intellectual property lawyer John Coldham, a

partner at Gowling WLG in London who worked with brands during

the 'Fake Free London' pre-Olympics operation of 2012. A bigger

concern for French fashion houses may however come from foreign

shoppers' reluctance to visit Paris during the Olympics, rather

than from revenues lost to counterfeits.

Air France-KLM warned last week it expects a hit of as much at

180 million euros this summer as some foreign tourists avoid the

French capital. LVMH and rivals have said they are not

anticipating a revenue boost from the sport event, and may shift

their focus elsewhere.

"Luxury companies are indicating that they are ready to

receive shoppers elsewhere than in Paris: from the Cote d'Azur,

to Milan and beyond," said Luca Solca, a luxury goods analyst at

research and brokerage firm Bernstein.