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Essilor-Luxottica merger receives unconditional approval

02/03/2018By Matthew Woodley • Staff Journalist
The proposed €48 billion (AU$75.98 b) ‘super-merger’ between French lens maker Essilor and Italian eyewear company Luxottica has received unconditional approval from Europe’s antitrust body.

The European Commission (EC) announced its decision on the same day that the US Federal Trade Commission (FTC) confirmed it had closed its investigation into the same merger, clearing the way for the deal to be finalised soon.

The news mirrors an Australian Competition and Consumer Commission (ACCC) determination from October 2017 to not oppose the proposed merger, citing minimal direct competitive overlap between the two parties.

Similarly, EC commissioner Ms Margrethe Vestager said it had been concluded that the merger would not adversely affect competition in the European Economic Area or any substantial part of it.

“Our job is to ensure that a merger won’t lead to higher prices or reduced choices – in this case for opticians and consumers in the EU. We’ve received feedback from nearly 4,000 opticians in a market test in Europe that Essilor and Luxottica would not gain market power to harm competition,” she said.


"Our job is to ensure that a merger won’t lead to higher prices or reduced choices – in this case for opticians and consumers in the EU. We’ve received feedback from nearly 4,000 opticians in a market test in Europe that Essilor and Luxottica would not gain market power to harm competition."
Margrethe Vestager, EC comissioner

“As the result of the market test, [which] did not support our initial concerns, we can let this merger go ahead unconditionally.”

The announcement concluded a six-month in-depth investigation that assessed whether the merged company might use Luxottica’s powerful brands to make opticians buy Essilor lenses and exclude other lens suppliers from the markets, through practices such as bundling or tying. However, the EC determined that Luxottica’s strongest brands, such as Ray-Ban, were not essential products for opticians, as the company only had a market share of less than 20% of frames in Europe and a sizeable number of stores did not sell any of its frames at all.

It also found that the merged company would not be able to exclude rival eyewear suppliers from the market, as Essilor possesses insufficient market power and incentives to block Luxottica’s competitors.  

In the US, the FTC stated that the evidence did not indicate that the merger would violate federal antitrust laws.

“FTC staff extensively investigated every plausible theory and used aggressive assumptions to assess the likelihood of competitive harm,” a statement released by the antitrust authority said.

“The investigation exhaustively examined information provided by a wide and deep swath of market participants, as well as the parties’ own documents and data. Assessing the likely competitive effects of a proposed transaction is a fact-specific exercise that takes into account the current market dynamics, which may be different in the future. Here, however, the evidence did not support a conclusion that Essilor’s proposed acquisition of Luxottica may substantially lessen competition.”

Both companies stocks have risen since the announcements, which were the final major regulatory hurdles for the proposed deal after it already received unconditional approval in Australia, Canada, Chile, Colombia, India, Japan, Mexico, Morocco, New Zealand, Russia, South Africa, South Korea and Taiwan.

Meanwhile, Luxottica also recently reported record profits of €1.038 billion (AU$1.65 b) for the 2017FY – a 24.7% increase at constant exchange rates. The profits were driven by net sales of €9.15 billion (AU$14.51 b) and a strategic renewal initiated three years ago by CEO and founder Mr Leonardo Del Vecchio.

Essilor also posted what it described as a “solid” 2017FY operating profit of €1.25 billion (AU$1.98 b), a 1.7% increase on the previous year, from revenue of €7.49 billion (AU$11.88 b).

More reading: The European Commission’s statement.



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