EssilorLuxottica/GrandVision harmful to independent opticians

09 August 2019 - 12:00 am UTC

GrandVision’s proposed acquisition by EssilorLuxottica is viewed as highly problematic for independent opticians due to the risk of restricted access to lenses and frames, according to third parties who spoke to this news service.

The combination of the two companies, which could lead to restrictions for small opticians, as well as to a drop in the prices of lenses and frames for consumers, is likely to raise complaints from third parties, said an advisor to a third party. Competitors are starting to become concerned, he and a second third-party advisor added.

EssilorLuxottica, a major player in the production of optical frames and lenses, has proposed to buy a 76.72% stake in optical retailer GrandVision, for EUR 5.5bn. This news service previously reported that the European Commission’s (EC) review, which could be a phase II candidate, is likely to focus on vertical foreclosure, although any horizontal overlaps would also be examined.

The most problematic aspect of the acquisition is its impact on independent opticians that compete with GrandVision, said Tushar Majithia, a councillor at UK-based Association of Optometrists (AOP), and Yannick Dyant, president of France-based Association des Optométristes.

The transaction would put the combined entity in a dominant position and independent opticians who rely on EssilorLuxottica products would be indirectly helping GrandVision by being customers of its parent company, said Majithia, who owns an independent practice. The deal could also allow GrandVision to expand its brand offering, he said.

French optometrists will have to adapt and may depend more on lens producers such as BBGR, Dyant said, adding that he has spoken to an independent optometrist who now wants to switch suppliers. The problem is that many optometrists want to sell Essilor lenses, given the value of that brand to the public, he added.

“Negotiating power over lenses and frames is a big issue here,” Dyant said, explaining that following the acquisition of GrandVision, other retailers will have less leverage in negotiations with EssilorLuxottica.

Moreover, EssilorLuxottica, which offers financing plans to optometrists for machinery such as measuring equipment and glazing machines, could provide more favourable financing terms to GrandVision, or else stop providing such financing to independent optometrists, he said.

The deal will be “life-changing” for some retailers, but it is difficult to judge whether it will be life-changing enough for the EC to block the deal, he said.

Thanks to its long-term relationship with opticians, EssilorLuxottica could also gather data on consuming patterns, which could advantage GrandVision, Dyant and Majithia agreed.

The EC could impose remedies to the parties, specifically to address the deal’s foreclosure effects, said the second third-party advisor. One potential behavioural remedy could be to limit how EssilorLuxottica uses its data, Dyant said.

The deal could also hurt consumers, given that they may see their choice of brands limited in GrandVision stores, according to Dyant and Majithia.

Both AOP and the Association des Optométristes have yet to publish their positions on the competition effects of the deal, and have not yet been contacted by the EC, Dyant and Majithia said.

EssilorLuxottica and GrandVision did not return requests for comment.

by Giulia Lasagni, Deane McRobie and Alessandra Castelli in London, and Francesca Micheletti in Brussels