Essilux and Grand Vision merger
AOP update on European Commission phase II investigation
Updated 19 April 2020
The European Commission is investigating the proposed merger between Essilux (Essilor/Luxottica) and Grand Vision. At the end of a Phase I investigation the Commission concluded that the merger might reduce competition in both wholesale and retail markets for optical products, which could lead to higher prices for consumers and therefore that it needed to conduct a Phase II investigation.
This work previously had a deadline of June 2020, but the Commission has since paused the inquiry, which means that the deadline has been extended until beyond the summer. This will allow the Commission more time to analyse the evidence from all parties and understand the market. An extension of this kind is common in a Phase II investigation, but in this case it is understood that the coronavirus (COVID-19) lockdown is making it more difficult for the Commission to gather and analyse evidence.
A merger of this size and type could possibly have a number of effects. These will be different in the various countries where the Essilor/Luxottica Grand Vision operate and of course this is one of the reasons that the European Commission needs to look closely at the merger.
In the UK the multiple optical retailer created from the merger would be slightly larger than Boots, and therefore become the second largest in the UK. This could, in itself, lead to competition issues in some localities. These could possibly be dealt with similarly to the way the Competition and Markets Authority dealt with the Vision Express and Tesco merger. In that case the merged entity was required to divest three stores.
This proposed merger has an extra dimension in that it is also a vertical integration. The concern therefore arises that the lens and frames supplier part of the merged entity could restrict supply to the companies within its own organisation, or might offer different terms and conditions to companies outside its own organisation. It has been argued that it would not be in the merged entity's interests to cut off its sales opportunities in this way, but it is one of the issues that the European Commission will need to investigate.
A further concern that has been expressed by some AOP members is that the Essilor/Luxottica part of the organisation could use the market information it holds about companies that it currently supplies, in a way that will benefit the new stores it will own. This is something else the Commission will need to look at.
The AOP is a member of the European Council of Optometry and Optics along with other UK optical sector bodies. We will keep members informed of the progress of this inquiry and will make sure business-owner members are given opportunities to submit evidence to the European Commission.
If you would like to be kept informed and would like to have the opportunity to complete the Commission's questionnaire please email [email protected]. Alternatively, you can share your views on our community forum.