BY Richard Summerfield
European competition regulators have launched an in-depth investigation into the proposed $54bn merger between eyewear maker Luxottica and lens manufacturer Essilor, amid concerns the move could stifle competition.
If approved, the deal, which was announced in January, would create a global eyewear powerhouse with a combined current market value of around €45bn, combined sales of about €15bn and staff of more than 140,000. The merged company could have a dramatic impact on the growing global eyewear industry. Luxottica, is the world’s leading consumer eyewear group and owner of Ray-Ban, Oakley and Sunglass Hut, while Essilor is the biggest manufacturer of lenses in the world.
The companies had hoped to have the deal completed by the end of 2017, but this now seems unlikely as the European Commission has until 12 February 2018 to approve or reject the proposed merger.
According to a statement announcing the probe, the Commission's initial market investigation raised several issues relating to the combination of Essilor's strong market position in lenses and Luxottica's strong market position in eyewear. The Commission is concerned that the combined organisation may “use Luxottica's powerful brands to convince opticians to buy Essilor lenses and exclude other lens suppliers from the markets, through practices such as bundling or tying. The Commission will investigate whether such conduct could lead to, adverse effects on competition, such as limiting purchase choices or increasing prices".
Margrethe Vestager, EU competition commissioner said: “Half of Europeans wear glasses and almost all of us will need vision correction one day. Therefore we need to carefully assess whether the proposed merger would lead to higher prices or reduced choices for opticians and ultimately consumers.”
Neither Luxottica nor Essilor opted to offer concessions to allay any of the EU’s competition concerns prior to the investigation annoucement. The companies had until 19 September to offer concessions to the European Commission after initial concerns were voiced by the EU about the deal.
Both Luxottica and Essilor declined to comment on the EU’s concerns. Competition regulators in the US are also examining the deal, which has already won approval from authorities in Russia, India, Colombia, Japan, Morocco, New Zealand, South Africa and South Korea.