EU launches full-scale probe into $54B Essilor-Luxotica merger

The European Commission plans to investigate whether the €46 billion merger of Luxottica (NYSE:LUX) and Essilor (EPA:EI) could drive competitors away from the market or hike prices, according to Reuters.

The companies hold high-ranking positions in the ophthalmic lens and eyewear industries. Earlier this month, Luxottica and Essilor decided not to offer concessions in a preliminary review by antitrust authorities.

The agency said it plans to decide whether to clear the deal or not by February next year, but the two companies said they hope to close the merger at the end of this year.

“Both companies … will closely cooperate with the European Commission to fully demonstrate the rationale of the proposed combination,” they said in a joint statement, Reuters reported.

One concern that antitrust authorities have is that the merged company might encourage opticians to buy eyewear and lenses in packages. The Commission wants to ensure that Luxottica’s rivals have access to the lens market and Essilor’s rivals have access to the frames market.

“The final outcome will hinge to a large extent on concessions the two companies make to offset any foreclosure risks,” Luciano Di Via, head of antitrust affairs for Italy, told the newswire.

“Usually in situations such as this, behavioural remedies are requested, the commission may demand commitments from the two companies in terms of commercial practices, a request to sell certain assets is more unlikely.”

“Half of Europeans wear glasses and almost all of us will need vision correction one day,” European Competition Commissioner Margrethe Vestager told Reuters.

“We need to carefully assess whether the proposed merger would lead to higher prices or reduced choices for opticians and ultimately consumers.”

The merger is still waiting for clearance in the U.S., but it has been approved in India, Japan and New Zealand.

($1 = 0.8490 euros)

Material from Reuters was used in this report.

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