Thorough vetting of the proposed merger of Luxottica and Essilor will be required by European antitrust authorities, the head of the EU Commission’s competition watchdog has said.
Documents filed with the EU Commission showed it was officially notified of the €47bn merger on August 22.
EU competition commissioner Margrethe Vestager said it was too early to say whether approval would require the companies to make significant concessions on the terms of the merger.
A negative reaction from Essilor’s customers to the merger, which the company said in July had affected its first-half sales, has raised concerns among some analysts that the two companies may be required to make more substantial concessions to satisfy the competition regulators than initially anticipated.
Exane-BNP Paribas analysts told Reuters that the examination of the deal by EU competition authorities would include sounding out competitors, clients, and professional associations as well as reviewing possible complaints.
The analysts added that vertical integration between companies working at different stages of the production chain was normally less worrying for competition authorities than horizontal mergers that boosted market share. However, vertical tie ups could still risk blocking rivals’ access to suppliers, a process known as foreclosure.
Vestager added that careful examination was necessary given the size of the two companies: ‘Even if it is a vertical integration, when you have market shares of this kind, in the high double digits, of course we have to be thorough in our analysis to make sure you don’t foreclose,’ she said.
