EssilorLuxottica’s acquisition of GrandVision has been approved by the European Commission (EC) after its review was delayed by the pandemic.
In July, 2019, EssilorLuxottica acquired HAL Holdings’ 76.72% interest in global eye care retailer GrandVision with a €7.1bn
valuation.
It was initially thought that the acquisition of GrandVision would expand EssilorLuxottica’s optical retail platform, primarily in Europe, by adding more than 7,200 stores globally, an extra 37,000 employees and additional €3.7bn in annual revenue.
However, clearance was conditional to the divestment of approximately 350 optical retail businesses across Belgium, the Netherlands and Italy.
In Belgium, 35 GrandVision stores would be sold to a buyer who would rebrand and in the Netherlands a total of 142 EyeWish sites would be sold with the brand name.
Conditions stipulated that the merged entity would keep some stores from the EyeWish chain and would have to rebrand under a new name.
In Italy the merged entity would divest 174 stores, including all of EssilorLuxottica’s VistaSi brand and 72 GrandVision By sites.
VistaSi would be transferred and the GrandVision By stores would either be rebranded to VistaSi or to the purchaser’s own brand.
The proposed transaction would still be dependent on decisions made by competition authorities in Chile and Turkey, as well as decisions related to ongoing litigations.
The UK has been included in the Commission’s decision because proceedings started before the end of the Brexit transition period. GrandVision owns the Vision Express brand and the merger would increase EssilorLuxottica’s position in the UK considerably.
Margrethe Vestager, executive vice-president of the European Commission, said: ‘Our in-depth investigation showed that, by acquiring a greater retail footprint, EssilorLuxottica could have degraded the access of rival opticians to EssilorLuxottica’s branded eyewear products in Belgium, Italy and the Netherlands.
‘This would mean less choice and higher-priced eyewear for consumers in those countries. The remedies proposed by EssilorLuxottica will address this risk by ensuring that competition at the optical retail level remains vibrant at national level and to the benefit of customers in these countries.’
An in-depth investigation into the acquisition was launched by the European Commission in February, 2020 over competition concerns.
Concerns were raised that the merger may reduce competition for the wholesale supply of ophthalmic lenses and eyewear, as well as for the retail supply of optical products.
The European Commission assessed whether the acquisition would result in increased prices or reduction of choice for consumers.
During its investigation, the Commission received feedback from more than 4,300 opticians throughout Europe.
The Commission found that in Italy, the Netherlands and Belgium the merged entity would have the ability and incentive to leverage its position in the wholesale supply of frames to make it more difficult for competing retailers to access eyewear manufactured and distributed by the merged entity.
It added that this could reduce choice or raise prices charged to retailers for frames and would weaken the competition in these markets, which would ultimately lead to higher prices or less choice for consumers.
The Commission noted that in Italy, the transaction would bring together the two largest retailers operating in the market through chains, thus creating the largest player on the optical retail market, almost three times as large as the second player.
It concluded that if EssilorLuxottica met its conditions, then competition concerns would no longer be a barrier to the proposed transaction. The Commission’s final decision was conditional upon full compliance with the commitments.
EssilorLuxottica highlighted that the transaction was dependent on the outcome of ongoing litigation. In July, 2020, EssilorLuxottica launched legal proceedings in order to obtain information about how GrandVision managed its business during the pandemic.
It also wanted to assess the extent to which GrandVision had breached its obligations under the support agreement.
EssilorLuxottica said that despite repeated requests GrandVision did not provide this information on a voluntary basis, which left no other option but to resort to legal proceedings.
A Dutch District Court dismissed EssilorLuxottica’s demands for disclosure of information from GrandVision in September, 2020, which led to an appeal being made by EssilorLuxottica.