European Union antitrust regulators have confirmed that they plan to investigate the planned $54bn merger between Luxottica and Essilor, suggesting there are concerns related to rivals being driven from the market, or prices being artificially inflated.
The proposed merger, which would see the Italian eyewear giant merge with the renowned French lens manufacturer Essilor, will now be subjected to a full-scale European Commission investigation, with investigators confirming that they’re concerned around the deal reducing competition in ophthalmic eyewear and lenses.
Despite the investigation, both companies remain confident the deal will go ahead, and have confirmed that they want to close the merger by the end of 2017. A statement released by both parties states that they will cooperate closely with the European Commission in order to resolve the investigation as smoothly and quickly as possible.
The key concern prompting the investigation relates to the potential leverage the Luxottica brand portfolio, which includes everything from Oakley goggles to Ray Bans, could offer the new company. The Commission will seek to confirm that rivals to the Luxottica and Essilor brands will still retain full access to the lens and frames market, with the conclusion likely riding on concessions the brands are willing to make.
The merger has already been approved by the relevant authorities in numerous countries worldwide, including Japan, New Zealand and India. However, it still needs clearance in the North American market, which is by far the most lucrative for both brands.
Of course investigations such as this are not rare where large mergers are concerned, and commentators expect the situation will be resolved within the next 12 months. It’s unlikely that the Commission will require the selling of assets from either companies, but will seek reassurances that regulations are being met, and concessions from both companies are likely to be required.