Noticias

The Chilean Competition Authority (Fiscalía Nacional Económica or FNE) cleared with remedies the acquisition of GrandVision by EssilorLuxottica. Consequently, GrandVision’s assets in Chile – which included the optical retail chain Rotter & Krauss and a lenses’ processing laboratory – should be excluded from the transaction.

The original proposed acquisition consisted in the global acquisition of GrandVision by EssilorLuxottica. GrandVision is owned by the Hal Group and operate in Chile with the optical products retail chain Rotter & Krauss and an optical laboratory. On the other hand, EssilorLuxottica is active in Chile in the optical retail segment with five chains (two of them specialized in sunglasses), wholesale of frames and sunglasses, and lenses processing services.

The investigation was initiated by the FNE on February 14th of 2020 and on May 5^th of 2020 the investigation was extended to Phase II.

The analysis

At the outset of the FNE investigation, the parties offered remedies consisting in the divesture of two of the retail optical chains owned by EssilorLuxottica. The FNE carried-out an in-depth investigation of market conditions in which the FNE consulted optical products retailers, wholesalers of frames and sunglasses, department stores, optical laboratories, among others, and concluded that the initial remedies proposed by the parties were insufficient and that the merger would lead to a substantial lessening of competition.

The horizontal risks assessment concluded that an increase in prices in the optical products in retail was expected under the initial proposed remedies. The optical retail chains that would have been owned by EssilorLuxottica after the merger are currently the two main players in the retail market, and are also perceived by consumers as the closest competitors. Additionally, there were no mitigating elements as expected new entry, repositioning or expansion of existing actors in the market, or efficiencies generated by the merger that could have been enough in order to offset the identified risks.

The vertical risks assessment concluded that EssilorLuxottica would have had the ability and incentives to increase prices of frames, sunglasses and lenses processing services provided to the divested optical retail chains, which in consequence would have generated an increase in prices in the optical retail chain segment.

The proposed remedies

Considering the antitrust concerns raised by the FNE, the parties offered remedies consisting in the execution of a repurchase regarding GrandVision assets in Chile by Hal. This repurchase would avoid concentration in Chile in the retail of optical products in optical chains. Additionally, between September 2020 and March 2021, the parties offered several proposals to guarantee the competitive capability of Rotter & Krauss after the merger, which included:

• Obligation to supply Rotter & Krauss with GrandVision’s own brands, under same conditions currently applied.
• Obligation to supply Rotter & Krauss with EssilorLuxottica brands, under same conditions currently applied.
• Support agreement in information technology services.
• Limitations to access Rotter & Krauss’s sensitive information for the whole remedies period.
• Prohibition for EssilorLuxottica to hire Rotter & Krauss key managers.

Companies and products

EssilorLuxottica is a French-Italian vertically integrated multinational corporation based in Paris. In Chile, Essilor Luxottica is active in the retail segment under GMO, Econópticas, Ópticas Place Vendôme, Sunglass Hut and Ray-Ban. The company is also active in the wholesale of frames and sunglasses, and laboratory services for processing lenses.

GrandVision is a Dutch-based global player active in optical retail with a focus on delivering eye care to customers globally and it is part of the Hal Investment Group. In Chile GrandVision is active in the retail sales of optical products under the retail chain Rotter & Krauss and owns a laboratory which processes lenses for its own retail chain, being both assets part of the acquisition.

The decision will be published on the FNE’s website once the public version of these documents has been finalised.