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Eyewear manufacturers receive French Competition Authority sanctions

The FCA found a number of companies had imposed selling prices on practices, with Luxottica receiving a sanction of €125,174,000, while brand, Chanel, and eyewear company, LVMH, also received penalties

frames on the wall
Pexels/Karolina Grabowska
The French Competition Authority (Autorité de le concurrence) has fined a number of eyewear manufacturers for limiting the pricing freedoms of optical practices. Companies named in the July decision included LVMH, Logo, and Luxottica, as well as its brand, Chanel.

The investigation into the practices of eyewear manufacturers in France considered a period ranging from 1999 up to 2014. Proceedings have been ongoing since 2015, according to eyewear manufacturers, and followed an initial investigation held in 2009.

The FCA found that, in the time period covered, the companies had controlled or imposed the prices practices could charge, and prevented them from selling the products online.

Concluding the investigation, the FCA announced its decision to fine Luxottica €125,174,000 (approximately £106,084,339), and Chanel €130,000 (£110,174.35), while LVMH has received a penalty of €500,000 (£423,747.50) – reduced as the company decided not to contest the charges. There was no penalty imposed for Logo, as the company was liquidated in 2016.

The authority commented: “These practices, which are anticompetitive by their very nature, are serious. In particular, they have involved the use of monitoring and retaliation mechanisms.”

The measures have had an impact on end consumers, the authority suggested, as well as causing “significant damage” to the economy, as they concerned well-known brands and affected intra-brand competition over a long period of time.

Responding to the announcement, EssilorLuxottica has challenged the FCA’s decision against Luxottica and confirmed its intention to appeal.

The company said in a statement: “EssilorLuxottica firmly believes it has always conducted business according to the highest standard of compliance, always supporting customers, partners as well as the entire market. As such, the company strongly disagrees with the authority’s decision and considers the sanction highly disproportionate and groundless.”

EssilorLuxottica added that it is “confident that it will successfully demonstrate that the decision is wrong both from a factual and a legal perspective.”

The FCA investigation

The FCA concluded that, between 2005 and 2014, Luxottica had distributed ‘recommended’ prices to its retailers and entered into selective distribution agreements, which the authority said were interpreted as “prohibiting discounts and special offers for retail selling.” 

The authority suggested Luxottica organised the monitoring of prices, and that practices that ignored restrictions “were subjected to retaliatory measures,” such as delaying deliveries, withdrawing authorisation to distribute certain Luxottica brands or the blocking of their accounts.

Investigating the period from September 1999 to 2015 for LVMH, and 2002 to 2015 for Logo, the FCA said it found clauses in LVMH’s licence agreements and Logo’s selective distribution for the TAG Heuer brand that provided a framework for prices and promotions. Logo also provided recommended prices, monitored pricing by practices and contacted those who offered discounts, the authority found.

The authority also found clauses in the licensing agreements between Chanel and Luxottica (from 1999 to 2014) and between LVMH and Logo (from 2004 to 2015) that prohibited the online sales of sunglasses and frames by practices. Furthermore, clauses were found in the authorised retailer charters signed by Luxottica and its authorised retailers from 2002 to 2013 for the Chanel, Prada, Dolce & Gabbana, and Bulgari brands.

The authority determined that the damage caused by these measures was limited, however.

The impact on practices

Reacting to the news, one UK-based optometrist director, Neil Taylor of H Dickinson & Co, shared the feeling that actions from some major manufacturers could “prevent independents from prospering.”

While the cases above were addressed by the FCA, Taylor shared an insight into the disadvantages that independent practices could face by such actions, explaining that many patients recognise and request the key brand names, which are often owned by major eyewear manufacturers.

A related challenge for practices, he suggested, has been minimum order requirements, with practices unable to provide patients with branded frames without making the orders required. The alternatives, he suggested, would be to not stock the brand names, or to look at alternatives, “but that can cut down what you offer your patients.”

“What I do find strange is the third-party sellers,” Taylor added, who approach practices with branded products at reduced prices – questioning why these companies can access frames rather than practices that might have been willing to make a purchase, and at what prices the third-party sellers are purchasing the products for.

Earlier this year, EssilorLuxottica’s acquisition of GrandVision was approved and completed, following a competition approval process. Organisations had previously highlighted potential areas of concern regarding what was termed a ‘mega-merger.’ 

Reflecting on the acquisition and the expanded retail presence the eyewear company will now have in the UK, Taylor said he felt that the retail presence in and of itself is not so much the issue, but is concerned about the potential to restrict what is sold to independent practices.

The AOP's policy team is keen to hear from any members who notice changes in the frames market over the next few months, sharing: “There could be many reasons for changes. For example Brexit and economic conditions post-COVID could have a wide impact on the sector, as well as the behaviour of the big eyewear companies such as the FCA found against.”

Kathy Jones, policy adviser for the AOP, has asked members to get in touch with any market intelligence they would like the AOP to know about.