European Commission clears EssilorLuxottica’s acquisition of GrandVision
The approval is conditional on EssilorLuxottica making a number of divestments and commitments to address previous competition concerns
The approval has been made under the EU Merger Regulation, regarding the sale by HAL Optical Investments B.V of its 76.72% ownership interest in GrandVision to EssilorLuxottica.
The approval is conditional on the divestment of some of EssilorLuxottica’s optical retail businesses in Belgium, the Netherlands and Italy – totalling around 350 stores – to address competition concerns in the optical retail market.
In Belgium, the GrandOptical chain and its 35 stores will be sold. The sale will not include the brand name.
The merged entity will need to divest 174 stores in Italy. This includes the whole of EssilorLuxottica’s VistaSì chain. The brand will be transferred, while another 72 stores from the ‘GrandVision by’ chain will also be divested, and the stores rebranded to VistaSì or the purchaser’s own brand.
In the Netherlands, 142 stores from the EyeWish chain will be sold, along with the brand name. The merged entity will keep some of the stores from this chain, rebranding them under a new name.
The proposed remedies also include additional safeguards, which the European Commission suggests would ensure the smooth transfer of the divestments.
European Commission executive vice-president Margrethe Vestager, in charge of competition policy, shared in a statement: “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,” Vestager added.
Announcing the decision, GrandVision confirmed that it “continues to support EssilorLuxottca with the shared objective to close the transaction before 31 July 2021.”
The outcome of the proposed move is still dependent on receiving sign-off from the competition authorities in Chile and Turkey, as well as decisions in ongoing litigations. The transaction has been cleared in the United States, Russia, Mexico, Colombia and Brazil, and now the European Union.
Stephan Borchert, CEO of GrandVision, shared: “This is a significant milestone in the approval process for the transaction, and we are pleased that the regulatory authorities recognise the benefits the transaction will bring to our stakeholders.”
Assessing competition concerns
The decision follows an in-depth investigation into the proposed acquisition, which opened in February 2020. The takeover plans were first confirmed in 2019.
The investigation focused on competition concerns that could occur as a result of the merger, assessing if it could lead to weakened competition, higher prices or less choice.
Through the investigation, the Commission received feedback from over 4,300 practitioners throughout Europe.
Detailing the background of the decision, the Commission revealed that following its market investigation, it initially had concerns that the transaction could “worsen rival opticians’ access to EssilorLuxottica’s products in Belgium, Italy and the Netherlands.”
It particularly noted that in those countries, the merged entity could have had the ability to leverage its position to make it more difficult for competing retailers to access its eyewear, potentially weakening competition and leading to higher prices or less choice for consumers.
In Italy, the Commission’s investigation found the transaction would bring together the two largest retailers operating through chains, creating a company in the optical retail market that would be almost three-times as large as the second player.
The Commission concluded that the divestments proposed by EssilorLuxottica would mean the transaction would no longer raise competition concerns, particularly regarding optical retail.
The Commission explained: “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.”
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