EU antitrust regulators will investigate whether the planned 46-billion-euro ($54 billion) merger of Italian eyewear maker Luxottica and French lens manufacturer Essilor could drive out rivals from the market or push up prices.
The European Commission opened a full-scale investigation on Tuesday, saying the deal involving the two companies, both top-ranked in their sectors, may reduce competition in ophthalmic lenses and eyewear.
The move came after Luxottica (LUX.MI) and Essilor (ESSI.PA) declined to offer concessions in a preliminary review. Reuters reported on Sept. 11 that the competition enforcer had expressed worries about the deal to the companies.
The Commission said it would decide by Feb. 12 whether to clear the deal, but the two companies reaffirmed their goal of closing the merger at around the end of the year.
“Both companies … will closely cooperate with the European Commission to fully demonstrate the rationale of the proposed combination,” they said in a joint statement.
A key regulatory concern is the possibility that the merged company might persuade opticians to buy eyewear and lenses as a package, leveraging on Luxottica’s strong brand portfolio which includes Ray Ban and Persol as well as licensed names such as Chanel and Armani.
Luciano Di Via, a partner at law firm Clifford Chance and head of antitrust affairs for Italy, said the Commission would seek to verify that Luxottica’s rivals retained full access to the lens market and Essilor’s competitors had full access to the market for frames.
“The final outcome will hinge to a large extent on concessions the two companies make to offset any foreclosure risks,” he said.
“Usually in situations such as this, behavioural remedies are requested, the Commission may demand commitments from the two companies in terms of commercial practices, a request to sell certain assets is more unlikely.”
The 95 billion-euro eyewear industry is seen expanding steadily as the world’s population age and awareness of sun damage grows among middle classes in emerging countries.
“Half of Europeans wear glasses and almost all of us will need vision correction one day,” European Competition Commissioner Margrethe Vestager said.
“We need to carefully assess whether the proposed merger would lead to higher prices or reduced choices for opticians and ultimately consumers.”
The merger has already been approved by the competition authorities in several countries including India, Japan, New Zealand. It still needs clearance in North America, the biggest market for both companies.
Source: Reuters.com