LUXOTTICA HIT WITH BREACH-OF-CONTRACT SUIT
Byline: Wendy Hessen
NEW YORK — Lantis Eyewear has initiated a breach-of-contract suit against Luxottica Group SpA regarding distribution of Ray-Ban and Killer Loop sunglasses.
For nearly 17 years, Lantis has exclusively distributed both sunglass brands to department stores. As reported, Ray-Ban and Killer Loop were among the brands acquired by Luxottica in June when it purchased the entire eyewear division of Bausch & Lomb for $640 million in cash. Historically, Bausch & Lomb had handled sunglass distribution solely for the optical market, leaving the department store channel to Lantis.
In the suit, Lantis alleges that Luxottica and its Ray-Ban subsidiary have breached Lantis’s distributor agreement and unlawfully interfered with Lantis’s business relationships with its department store customers. Lantis further charges that Luxottica’s objective is to force department stores to sell Ray-Ban and Killer Loop eyewear at Luxottica’s recommended prices, a system that would preclude discounting and other promotional activities.
“We’ve had a true distributor relationship with Bausch & Lomb,” said Dan Bernstein, general counsel for Lantis. “In the last 12-month period, our sales have increased by 20 percent, which was a record. The terms of the contract states that Luxottica sells the merchandise to us and we resell it to the department stores. Luxottica has communicated directly with our department stores customers and informed them that they will henceforth sell Ray-Ban and Killer Loop merchandise at prices they have set. There is nothing in the contract about pricing.”
Outside of the department store channel, the Ray-Ban brand has a history of distribution problems. Despite repeated efforts, Bausch & Lomb was unable to eliminate gray market distribution and Ray-Ban sunglasses are still prevalent in mass market outlets such as the camera and souvenir shops along Fifth Avenue here. Luxottica has made no statement regarding its distribution strategy since acquiring Ray-Ban last summer.
Bernstein said Lantis is also asking for an undetermined amount of punitive damages.
“We believe that this kind of conduct has an element of malice in it,” he said. “These people seem to have an objective of taking control of the market.”
“Typically, accounts are the accounts of the distributor, not the manufacturer,” said Lon Moellentine, president and chief executive officer of Lantis. “We have been a model distributor, otherwise we wouldn’t have had our contracts repeatedly renewed.”
Moellentine said the firm’s current contract has about four years remaining.
“They are just trying to bully the marketplace,” he said. “This isn’t Italy, this is America and there are laws about such things.”
A spokeswoman for Luxottica on Friday said the company had no comment on the suit.
Based in Agordo, Italy, Luxottica is one of the world’s largest makers of eyewear. The firm produces and distributes the licensed eyewear collection for brands including Anne Klein, Brooks Brothers, Bulgari, Chanel, Ferragamo, Persol and Yves Saint Laurent, and also owns the LensCrafters eyewear chain.
Besides Ray-Ban and Killer Loop, Lantis also distributes the licensed eyewear lines of Jones New York, Oscar de la Renta and Tommy Hilfiger.