Publish Date : 27-Apr-2018
The Competition and Consumer Commission of Singapore (CCCS) has issued a clearance decision on the proposed merger between Essilor International (Compagnie Generale dOptique) S.A (Essilor) and Luxottica Group, S.p.A. (Luxottica) (collectively Parties). CCCS has concluded that the merger, if carried into effect, will not infringe the section 54 prohibition of the Competition Act (Cap. 50B).
Background
In Singapore, Essilor is primarily engaged in the wholesale distribution of ophthalmic lenses. The brands of lenses in Essilors portfolio include Crizal, Varilux and Transitions. Luxottica, on the other hand, is involved in the wholesale distribution of prescription frames and sunglasses (collectively eyewear). The brands of eyewear in Luxotticas portfolio include Ray-Ban, Oakley, Oliver Peoples, Burberry and Coach. Luxottica is also involved at the retail level through Sunglass Hut in the sale of mainly sunglasses.
CCCS received the notification for decision from the Parties on 13 September 2017. At the end of the Phase 1 review, CCCS was unable to conclude that the merger would not raise competition concerns. Therefore, CCCS proceeded with a Phase 2 review on 5 December 2017.
In the Phase 2 review, CCCS assessed whether the merged entity would engage in tying or bundling in order to leverage its market position in one market to foreclose competition in the other. CCCS also assessed whether the merger will eliminate competition between the Parties that would have taken place in Singapore if not for the merger.
Assessment
At the end of the consultation process and after evaluating all the evidence, CCCS assessed that, on balance, the evidence overall does not support a finding that the merger will lead to a substantial lessening of competition in Singapore.
In particular, the evidence does not support a finding at the pre-merger stage that the merged entity will have the ability to leverage on:
Luxotticas position in the markets for wholesale distribution of eyewear so as to foreclose competition in the market for the wholesale distribution of ophthalmic lenses; or Essilors position in the market for wholesale distribution of ophthalmic lenses so as to foreclose competition in the markets for the wholesale distribution of eyewear.
In this regard, feedback from third-parties suggests that retailers are able to switch to other suppliers in response to any tying/bundling strategy by the merged entity, and suppliers have excess capacity to accommodate a surge in orders. The evidence overall also does not support a finding that the Parties products are must have for retailers. With respect to eyewear, a large majority of retailers in Singapore do not carry Luxotticas products. With respect to ophthalmic lenses, end-consumers generally have low brand awareness and rely on opticians recommendations.
CCCS also assessed that the evidence overall does not support a finding that, absent the merger, the Parties will enter and expand into each others respective markets credibly and significantly, such that the merger will eliminate potential competition between the Parties that could have taken place if not for the merger. For example, market feedback indicates that the Parties entry into each others respective market(s) in Singapore is minor and insignificant. In Singapore, Luxotticas lens offerings are restricted in scope, while Essilors distribution of eyewear is minimal.
Go to previous page
