PARIS — The European Commission has opened an in-depth investigation into EssilorLuxottica’s proposed acquisition of Dutch optical retailer GrandVision, citing concerns that the merger would lead to higher prices and reduced choices for consumers.
Noting that EssilorLuxottica is the world’s largest supplier of eyewear and GrandVision is Europe’s largest optical retail chain, the commission said combining the two companies could reduce competition for the wholesale supply of ophthalmic lenses and eyewear, as well as for the retail supply of optical products.
“In this consolidating market, we need to carefully assess whether the proposed merger would lead to higher prices or reduced choices for consumers when they visit their local optician,” said Margrethe Vestager, executive vice president in charge of competition policy.
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EssilorLuxottica, the eyewear giant formed by the merger between Italy’s Luxottica and France’s Essilor, in July announced its intention to purchase a 76.72 percent interest in GrandVision from previous owner HAL at a cash purchase price equal to 28 euros a share, valuing the Dutch firm at upward of 7 billion euros.
The companies said they aim to close the transaction within 12 to 24 months from the announcement date, July 31, 2019, in cooperation with the relevant authorities.
“The parties are confident that phase two will be completed in a timely manner and will closely cooperate with the European Commission to fully demonstrate the rationale of the proposed acquisition and the benefits that it will bring to customers, consumers and all the eyewear industry players,” EssilorLuxottica said in a statement.
“The transaction has been unconditionally cleared so far in the U.S., Russia and Colombia, and it is currently under review also in Brazil, Chile, Mexico and Turkey,” it added.
EssilorLuxottica, whose portfolio includes brands such as Ray-Ban and Oakley, has been struggling with governance issues since its merger. Some analysts saw the GrandVision acquisition as a positive sign.
“We take the fact that it comes sooner than expected as a vote of confidence on the senior management organization evolution, which should allay market concerns on governance,” Luca Solca, analyst at Bernstein, said at the time.