Mergers: Commission clears acquisition of GrandVision by EssilorLuxottica, subject to conditions

Mergers: Commission clears acquisition of GrandVision by EssilorLuxottica, subject to conditions

The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of GrandVision by EssilorLuxottica. The approval is conditional on full compliance with commitments offered by EssilorLuxottica.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “EssilorLuxottica offers leading brands of eyewear products, such as Ray-Ban, whilst GrandVision is a major optical retailer in Europe. Our in-depth investigation showed that, by acquiring a greater retail footprint, EssilorLuxottica could have degraded the access of rival opticians to EssilorLuxottica’s branded eyewear products in Belgium, Italy and the Netherlands. This would mean less choice and higher-priced eyewear for consumers in those countries. The remedies proposed by EssilorLuxottica will address this risk by ensuring that competition at the optical retail level remains vibrant at national level and to the benefit of customers in these countries.”

Today’s decision follows an in-depth investigation of the proposed acquisition of GrandVision by EssilorLuxottica. EssilorLuxottica is the largest supplier of ophthalmic lenses and eyewear, both worldwide and in Europe, and has a very large portfolio of well-known brands such as Ray-Ban and Oakley. Additionally, EssilorLuxottica is active in the retail sale of optical products, notably in Italy and the UK. GrandVision is a globally active eyewear retailer, which operates some of the largest optical chains throughout Europe, such as GrandOptical and Pearle. EssilorLuxottica sells its products to optical retailers, including GrandVision, which resell them to final consumers.

The Commission’s investigation

The Commission’s in-depth investigation focused in particular on competition concerns that could arise from the combination of EssilorLuxottica’s strong market position in the wholesale supply of optical products (i.e., lenses and eyewear) and GrandVision’s leading presence in the retail distribution of these products.

During its investigation, the Commission received feedback from over 4,300 opticians throughout Europe.

In its assessment the Commission took into account the extent to which the companies are present at each level of the supply chain, the extent to which retailers have alternative, credible suppliers to turn to in those countries, the proportion of stores that sell the most important EssilorLuxottica brands in those countries and the expected reaction of consumers. The Commission also conducted economic modelling to assess the merged entity’s incentive to raise the wholesale prices it charges to retail competitors, as well as its incentive to raise the retail prices that it charges to consumers in its own stores.

Following its in-depth market investigation, the Commission had concerns that the transaction, as initially notified, could worsen rival opticians’ access to EssilorLuxottica’s products in Belgium, Italy and the Netherlands. In particular, the Commission found that:

  • In all those countries the merged entity would have the ability and incentive to leverage its important position in the wholesale supply of frames to make it more difficult for competing retailers to access eyewear manufactured and distributed by the merged entity, for example by reducing choice or raising prices charged to retailers for frames. This would weaken the competition in these markets, and ultimately leading to higher prices or less choice for consumers.
  • For Italy, the transaction would in addition bring together the two largest retailers operating in the market through chains, thus creating the largest player on the optical retail market, almost three times as large as the second player. This would considerably weaken competition in the Italian market, ultimately harming consumers.

The proposed remedies

To address the competition concerns identified by the Commission, EssilorLuxottica offered to divest part of its retail operations in each of the countries in which the Commission had concerns. In particular:

  • In Belgium, the GrandOptical chain and its 35 stores will be sold but without the brand name. The purchaser will have a license while rebranding these stores to its own choice of name.
  • In Italy, the merged entity will divest a total of 174 stores, which includes the whole of EssilorLuxottica’s VistaSi chain together with 72 stores from the “GrandVision by” chain. The VistaSi brand will be transferred and the “GrandVision by” stores will either be rebranded to VistaSi or to the purchaser’s own brand.
  • In the Netherlands, 142 stores from the EyeWish chain will be sold, together with the brand name. The merged entity will keep some stores from this chain and will have to rebrand them under a new name.
  • The remedy package also contains additional safeguards to ensure the smooth transfer of the divestment business to the purchaser, including transitional supply and support arrangements.

The Commission concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. In particular, the remedies limit the retail footprint of the merged entity and reduce its incentive to restrict competitors’ access to optical frames in Belgium, Italy, and the Netherlands, while creating or strengthening a credible optical retail competitor at national level in these countries. The Commission’s decision is conditional upon full compliance with the commitments.

Source: Mergers: Clearance of GrandVision – EssilorLuxottica (europa.eu)

Photo Credit : https://pixabay.com/fr/photos/lunettes-lunettes-de-lecture-4231813/

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