An investigation into anti-competitive behaviours in France recently ruled the likes of Luxottica, Chanel and Logo unfairly restricted prices of eyewear to opticians and limited availability of frames online for nearly a decade.
Luxottica, now part of EssilorLuxottica, was hit with a €125m fine by the Autorité de la concurrence, the French market competition regulator. Also fined were Moët Hennessy Louis Vuitton (LVMH) (€500,000), Chanel (€130,000), and Logo, which was placed in liquidation in 2016.
The Autorité investigation into the practices of the companies began in 2005 following a series of dawn raids on offices and a report from the Directorate General for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF). There were two strands to the investigation, one which looked at the limitations of opticians’ right to set their own prices and another that detailed restrictions put in place to sell eyewear products online. Luxottica, LVMH, Chanel and Logo weren’t the only companies investigated by the Autorité. Notification of grievances were also served to retailers Alain Afflelou, Krys, Gadol, Optical Center and GrandVision, along brands and suppliers Dior, Alain Mikli, Safilo, Silhouette and Maui Jim. However, French laws on the length of time anti-competitive behaviour took place meant no action could be taken against this group of companies.
Price police
The Autorité investigation into Luxottica found the company had presented ‘recommended’ prices to its retailers and encouraged them to maintain a certain retail price point for its products. It said Luxottica drew up lists of recommended prices and entered into selective distribution agreements with its retailer network, including Alain Afflelou, Krys, Gadol, Optical Center and GrandVision, which prohibited discounts and special offers. This retailer network was then tasked with monitoring prices among other optical practices, said the Autorité. One practice manager who gave evidence during the investigation, likened the monitors as ‘price police.’
Practices that ignored Luxottica’s policy were then subjected to retaliatory measures, such as delaying or suspending deliveries to their stores, withdrawing the authorisation required to sell certain Luxottica brands or blocking their accounts to prevent them from placing orders. ‘These practices, which are anticompetitive by their very nature, are serious,’ said the Autorité. ‘In particular, they have involved the use of monitoring and retaliation mechanisms. Moreover, they had an impact on end consumers, some of whom are captive and vulnerable, as the purchase of glasses and, in some cases, sunglasses, is a necessity.
‘They also caused significant damage to the economy, insofar as they concerned well-known brands, affected intra-brand competition (price competition for the same product within different networks) over a long period of time, and involved a significant proportion of retailers, including major national retailers.’
EssilorLuxottica said it had always conducted business according to the highest standard of compliance, and in doing so, supported customers, partners along with the entire market. ‘The company strongly disagrees with the Autorité’s decision and considers the sanction highly disproportionate and groundless. The company will appeal the decision, confident that it will successfully demonstrate that the decision is wrong both from a factual and a legal perspective,’ said an EssilorLuxottica spokesperson.
LVMH was also sanctioned for its distribution practices but as the group had agreed not to contest the regulator’s charges earlier in the proceedings, its penalty was capped at the legal limit of €500,000. Logo was also found guilty of free pricing limitations.
Online restrictions
Opticians were also prohibited from selling sunglasses and ophthalmic frames online by Chanel, Luxottica, LVMH and Logo. The restrictions were a result of clauses in licensing agreements put in place between the brands and manufacturers. The Autorité said the restrictions had the effect of depriving opticians and the general public of a sales channel that was generally characterised by competitive pricing. When considering severity, however, it considered that only in 2011, when Court of Justice of the European Union ruled that banning selling on the internet constituted a restriction of competition, was this behaviour deemed anti-competitive in France.
As Optician went to press, LVMH and Chanel had not responded to requests for comment.