Mergers: Commission opens in-depth investigation into proposed acquisition of GrandVision by EssilorLuxottica

(Apostolos Vamvouras, Unsplash)

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The European Commission has opened an in-depth investigation to assess the proposed acquisition of GrandVision by EssilorLuxottica, under the EU Merger Regulation. The Commission is concerned that the merger may reduce competition for the wholesale supply of ophthalmic lenses and eyewear, as well as for the retail supply of optical products.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “EssilorLuxottica is the world’s largest supplier of eyewear and GrandVision is Europe’s largest optical retail chain. In this consolidating market, we need to carefully assess whether the proposed merger would lead to higher prices or reduced choices for consumers when they visit their local optician.”

The proposed merger would combine two leaders in the optical industry. EssilorLuxottica is the largest supplier of ophthalmic lenses and eyewear in Europe and worldwide, and has well-known brands in its portfolio, such as Ray-Ban and Oakley. Additionally, EssilorLuxottica is active in retail distribution, notably in the UK and Italy. 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 preliminary competition concerns

The Commission’s initial market investigation raised several issues relating in particular to the combination of EssilorLuxottica’s strong market position in the wholesale supply of optical products, notably lenses and eyewear, and GrandVision’s leading presence in the retail distribution of these products.

At this stage, the Commission is concerned that the transaction could lead to a reduction of competition in the retail markets for optical products. In particular, in its in-depth investigation, the Commission will assess:

(i)      whether EssilorLuxottica will use its strong market presence in lenses and eyewear to raise prices or degrade conditions of supply to competing retailers of GrandVision,

(ii)     the impact of the combination of the activities of EssilorLuxottica and GrandVision in retail, particularly in those countries and areas where they currently compete, and

(iii)    whether the merged entity could limit access of competing suppliers of lenses or eyewear to GrandVision stores, which constitute the largest optical products distribution network in Europe and a key outlet for competing suppliers.

The Commission will investigate whether such changes in the competitive landscape of the optical industry could lead to adverse effects on competition, such as increased prices or reduction of choice of optical products for final consumers.

The transaction was notified to the Commission on 23 December 2019. EssilorLuxotica and GrandVision have decided not to submit commitments during the initial investigation to address the Commission’s preliminary concerns. The Commission now has 90 working days, until 22 June 2020, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.

Companies and products

EssilorLuxottica is a French-Italian vertically integrated multinational corporation based in Paris and the world’s largest supplier of eyewear with over 9,100 retail stores globally. It was founded on 1 October 2018 after the combination of the Italian Luxottica Group with the French Essilor International. The Commission approved unconditionally this transaction on 1 March 2018.

GrandVision is a Dutch-based global player active in optical retail with a focus on delivering eye care to customers globally. GrandVision operates over 7,000 stores in more than 40 different countries across Europe, North and Latin America and Asia.

Merger control rules and procedures

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

In addition to the current transaction, there are five ongoing Phase II merger investigations: the proposed acquisition of DSME by HHIH, the proposed acquisition of Metallo by Aurubis, the proposed acquisition of Chantiers de l’Atlantique by Fincantieri, the proposed creation of two joint ventures by Boeing and Embraer, and the proposed acquisition of Lotos by PKN Orlen.

More information will be available on the competition website, in the Commission’s public case register under the case number M.9569.