image: Prada
European Union antitrust regulators have cleared eyewear giants Luxottica and Essilor in an until-recently ongoing investigation into the parties’ $54 billion merger, which it initiated when the two companies failed to provide requested data. The deal has “sparked regulatory concerns that it may lead to price rises or mean retailers are forced to buy both lens and eyewear from the merged company,” per Reuters.
On September 26, the European Commission, an institution of the European Union responsible for implementing decisions, launched a full-scale investigation into the merger that sees Italy’s Luxottica – which maintains a brand portfolio that includes practically every well-known brand, such as Ray-Ban, Persol, and Oliver Peoples, as well as the rights to design, manufacture, and distribute eyewear of luxury brands including Burberry, Prada, Chanel, Miu Miu, and Versace – pair with French lens manufacturer Essilor in “an effort to meet growing global demand for corrective lenses, sunglasses and luxury eyewear.”
According to the European Commission, it closed its investigation on October 25, telling Reuters in an email: “This procedure in merger investigations is activated if the parties fail to provide, in a timely fashion, an important piece of information that the Commission has requested from them.”
The move comes roughly a month after EU Competition Commissioner Margrethe Vestager told Reuters that the deal would require careful vetting given the size of the two companies’ market shares.
While the boards of Essilor and Luxottica approved the merger early this year, it is still in need of approval by Essilor’s works council and French labor bodies. Still yet, it must as establish compliance with and passage of anti-trust probes in the U.S., Canada, China, and Brazil, among other nations.
In the first regulatory ruling on the merger, New Zealand’s competition regulator approved the deal in September, declaring Luxottica-Essilor would “be sufficiently constrained by the presence of existing competitors with the ability to expand at all levels of the supply chain and in all relevant markets.” Australia’s competition agency cleared the deal last month, saying it did not see any issues.
Meanwhile, U.S. regulators are also examining the merger, which made headlines for what many have alleged creates a “monopoly” on eyewear.
A spokesman for Essilor said earlier this year that because “the parties’ activities are highly complementary, the deal would generate significant synergies and innovation and would be beneficial to customers,” but others are not convinced.
As WWD noted in March, “By supplying the two main elements of the final product [Luxottica manufactures eyeglass frames, and Essilor produces lenses], Luxottica/Essilor will essentially control the entire supply chain in the eyewear market. This will also likely give them leverage over the booming global eyewear market, which is expected to reach a value of $130 billion by the end of 2018.”
“For brands, this means access to fewer licensing partners, which means fewer distinct design directions to offer brands. The market will thus be flooded with a limited range of generic designs from one company posing as multiple companies,” Andrew Lipovsky, founder and chief executive officer of eyewear licensor, Eponym, told WWD.
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