On October 6, 2022, the French Competition Authority (the “FCA”) imposed a €81 million fine on Essilor International SAS (“Essilor”) for having engaged in discriminatory trading practices aimed at hindering the development of e-commerce for optical lenses in France between April 2009 and December 2020.[1] Essilor’s parent company, EssilorLuxottica, was fined €15.4 million jointly and severally with its subsidiary and announced its intention to appeal the decision.[2]

The abusive conduct

The FCA found that Essilor abused its dominant position on the French market for the wholesale distribution of corrective lenses by discriminating against online retailers. The discrimination was found to have materialized via two types of practices.

First, Essilor was found to have imposed restrictions on online retailers regarding their ability to communicate on the origin of Essilor- branded lenses as well as the use of Essilor’s brands and logos.

Second, Essilor was found to have limited the warranty on lenses purchased from online retailers. In practice, the warranty offered by Essilor on the sale of its lenses was conditioned on the retailer’s compliance with a certain protocol that applied to how visual needs should be determined, and which was designed exclusively for in-store sales. Non-compliance with the protocol resulted in the retailer bearing sole responsibility for the replacement of the lenses, which was found to constitute a discrimination against online retailers.

The lack of objective justifications

Essilor tried to challenge the qualification of abuse but failed to convince the FCA that the restrictions were justified.

First, Essilor argued that the practices were not discriminatory, since brick-and-mortar and online retailers did not provide equivalent services. In particular, Essilor argued that the evaluation of one’s visual needs by online retailers could not be relied upon. However, the FCA found that online retailers benefit from a high customer satisfaction rate, and Essilor itself also started supplying corrective lenses online as early as 2009 abroad, and since 2019 in France. The FCA therefore concluded that the services provided by both categories of retailers were equivalent, and therefore should have been treated in the same way by Essilor.

Second, Essilor argued that external factors explained the relatively modest success of online sales for corrective lenses, pointing in particular to the lack of clarity of the French legal framework applicable to online sale of lenses, as well as to the reimbursement policy of the French social security system, which meant that French consumers were not incentivized by lower prices charged online and valued direct contact with their optician. The FCA responded that the fact that external factors could have influenced the development of online sales did not rule out the anticompetitive effect of Essilor’s behavior. Furthermore, the FCA highlighted that Essilor’s brand was highly valued by consumers such that emerging online retailers needed access to its products in order to successfully operate in the market.

Third, Essilor claimed that the practices were necessary to prevent any free riding from online retailers, which supposedly encouraged their customers to go to brick-and-mortar retailers to have their visual needs evaluated but buy the products online. However, according to the FCA, this claim was not backed by any evidence.

Finally, Essilor argued that the restrictions were necessary to protect its brand image, considering that there was a “high risk” that issues caused by inappropriate evaluation of one’s visual needs could be attributed to its products. However, the FCA referred to Essilor’s internal documents, which showed that the underlying rationale for such commercial strategy stemmed in fact from a desire to safeguard margins and avoid pressure from brick-and-mortar retailers. It also stated that these alleged justifications were in contradiction with Essilor’s own online sales channel.

Fine calculation

The FCA set Essilor’s fine to €81,067,400, considering that the gravity of the practices was “certain,” in particular as they targeted a sales channel that was still under development and consequently limited price competition. Nevertheless, the FCA concluded that the harm done to the economy was “moderated” due to the limited share of online sales in France.

The FCA also noted that EssilorLuxottica achieved a consolidated worldwide turnover of 19.8 billion euro in 2021, and stressed its “size, economic power and important global resources.” As such, and since the value of sales used to calculate the fine only represented 1.5% of the group’s most recent worldwide turnover, the basic amount of the fine was increased by 10%.

[1]      FCA Decision No. 22-D-16 of November 6, 2022, regarding practices implemented in the optical lenses sector.

[2]      EssilorLuxottica Press Release, “EssilorLuxottica challenges the decision of the French Competition Authority”, November 8, 2022.