CELEX: 32013M7020
Language: en
Date: 2013-11-15 00:00:00
Title: Commission Decision of 15/11/2013 declaring a concentration to be compatible with the common market (Case No COMP/M.7020 - LVMH / LORO PIANA) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |
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                                        Brussels, 15.11.2013
                                        C(2013) 8141 final

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|                                                                    | To the notifying party:                                                |

Dear Sir/Madam,

Subject:    Case No COMP/M.7020 - LVMH/ Loro Piana
         Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1]

   1) On 11 October 2013, the European Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation
      (EC) No 139/2004[2] by which LVMH Moët Hennessy – Louis Vuitton S.A. ('LVMH', France), indirectly controlled by Groupe Arnault SAS ('Groupe
      Arnault'), acquires within the meaning of Article 3(1)(b) of the Merger Regulation sole control  over  Loro  Piana  S.p.A.  ('Loro  Piana',
      Italy). LVMH is hereinafter referred to as the 'Notifying Party' whereas LVMH and Loro Piana are collectively referred to as the 'Parties'.

I. THE PARTIES

   2) LVMH is active in the production and sale of luxury goods (wines and spirits; fashion and leather goods,  including  accessories;  perfumes
      and cosmetics; watches and jewellery; selective retailing as well as the luxury yachts industry). Groupe Arnault[3] – the  ultimate  parent
      company of LVMH – also controls Christian Dior Couture (luxury fashion, leather goods, watches and jewellery), Moynat brand (luxury leather
      goods) and Vermont brand (luxury handmade embroidery).

   3) Loro Piana manufactures and distributes men's and women's luxury fashion goods, leather goods, accessories and shoes. It also produces high
      range textiles, fabrics and yarns (in particular cashmere) for the  production  of  men's  and  women's  fashion  goods  and  for  interior
      decorations and furnishings.

II.  THE OPERATION AND CONCENTRATION

   4) Pursuant to the Share Purchase Agreement dated 4 July 2013, LVMH will purchase 77.1296% of the share capital of Loro Piana.  The  remaining
      shares will be held by the Loro Piana company itself (3.59%) and by two members of the Loro Piana family – Mr Sergio Loro Piana (9.65%) and
      Mr Pier Luigi Loro Piana (9.65%). Decisions at the shareholders' meeting and within the board of directors of Loro Piana are taken with the
      favourable vote of the majority of shareholders or directors present and there are no  quorum  requirements.  As  a  result,  the  minority
      shareholders of Loro Piana will not hold any veto rights enabling them to exercise decisive influence over the strategic decisions of  Loro
      Piana. Following the transaction LVMH will thus solely control Loro Piana.

   5) Based on above, the proposed transaction constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

III. EU DIMENSION

   6) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 2,500  million[4]  (Groupe  Arnault:[5]  EUR  […]
      million, Loro Piana: EUR […] million). In each of France[6], Italy[7] and the United Kingdom[8] the  combined  aggregate  turnover  of  the
      undertakings concerned is more than EUR 100 million and the aggregate turnover of at least two of the undertakings concerned is  more  than
      EUR 25 million. The aggregate EU-wide turnover of each of the undertakings concerned is more than EUR 100 million (Groupe Arnault: EUR  […]
      million; Loro Piana: EUR […] million), but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one and  the
      same Member State.

   7) The notified operation therefore has an EU dimension within the meaning of Article 1(3) of the Merger Regulation.

IV. COMPETITIVE ASSESSMENT

   8) The Parties' activities overlap in the production and sale of luxury goods.

   9) There is a vertical relationship between Loro Piana's production and sale of high-range textiles  (fabrics  and  yarns)  and  the  Parties'
      activities in the production and sale of luxury goods. However this vertical relationship does not lead to any affected market.

1.    Relevant market definitions

      Relevant product markets

  10) The Notifying Party submits that the relevant product market is the production and  sale  of  all  luxury  products  and  that  no  further
      segmentation into different categories of luxury goods should be made.

  11) In a previous decision,[9] the Commission analysed the market for luxury goods and its potential categories of:  (i)  fashion  and  leather
      goods including accessories, (ii) perfumes and cosmetics and (iii) watches and jewellery. However ultimately the market definition was left
      open.[10]  The Commission has also previously considered whether a distinction between wholesale and retail sales of luxury products should
      be made.[11]

  12) The data collected during the market investigation in the present case seem to militate in favour of the consideration that luxury  leather
      goods constitute a separate segment within luxury products.[12]  The  market  investigation  was,  however,  inconclusive  whether  further
      subdivision of the market should be made on the basis of gender[13] or between the categories of (i) luxury  accessories  (such  as  belts,
      gloves etc.), (ii) luxury bags and (iii) luxury shoes.[14] One of the respondents also mentioned a  potential  category  of  small  leather
      goods, which would include small bags, wallets or credit card holders.[15]

  13) The Commission considers that it is not necessary to conclude on the exact product market definition in the present case since the proposed
      transaction does not give rise to competition concerns under any of the plausible market delineations.

      Relevant geographic markets

  14) The Notifying Party submits that the relevant geographic market for luxury products is worldwide, or at very least EEA-wide,  and  that  it
      should not be subdivided into national markets.

  15) In the previous decisions, the Commission has left it open whether the geographic scope of the market(s) for luxury products was  national,
      EEA-wide or worldwide.[16]

  16) For the purposes of the present case, the Commission considers that it is  not  necessary  to  conclude  on  the  exact  geographic  market
      definition since the proposed transaction does not give rise to competition concerns under any plausible market definitions.

2.    Competitive assessment

  17) If the potential market is to encompass all luxury products, the transaction does not lead to any  affected  market,  irrespective  of  the
      geographic market definition.[17] Also if a distinction is made between: (i) jewels and watches; (ii)  perfumes  and  cosmetics  and  (iii)
      fashion and leather goods, including their potential narrower segments, no affected markets arise.[18]

  18) Should it be considered that the potential total market for leather goods was to be divided into (i) men’s bags, (ii) women’s  bags,  (iii)
      accessory leather goods for men, (iv) accessory leather goods for women, (v)  shoes  for  men,  (vi)  shoes  for  women,[19]  the  proposed
      transaction would lead to an affected market in 'accessory leather goods for women' at the EEA-level. The  combined  market  share  of  the
      Parties would amount to [10-20]% (Groupe Arnault: [10-20]%, Loro Piana: [0-5]%).[20]

  19) Additionally, on the basis of potential national market definitions, the proposed transaction would lead to affected markets in the  market
      for leather goods in Italy (combined market shares of [10-20]%) and France (combined market shares of [10-20]%). In both of these potential
      national markets, the increment in market share equals to [0-5]%.

  20) Therefore, post-transaction the competitive landscape described above will not be altered to an appreciable extent as the transaction  will
      only lead to very limited increments in market shares, i.e. of less than one percentage-point.

  21) In addition, in the affected markets, the combined entity will continue to face competition from established fashion houses, such as Gucci,
      Prada, Chanel, Hermès and Richemont. These competitors are active at the EEA-level in the potential market for accessory leather goods  for
      women with market shares of [5-10]% for Gucci, [5-10]% for Prada, [5-10]% for Chanel, [0-5]% for Hermès and  [0-5]%  for  Richemont.  These
      competitors are also active at national level. In Italy, the merged entity will face the following competitors Gucci ([10-20]%), Chanel ([5-
      10]%), Prada ([5-10]%), Hermès ([5-10]%) and Tod's ([0-5]%). A similar competitive landscape exists  in  France,  including  the  following
      competitors in the potential market for leather goods: Gucci ([10-20]%), Chanel ([10-20]%), Prada ([5-10]%), Hermès ([5-10]%) and Richemont
      ([0-5]%).

  22) In view of the above, the Commission considers that the proposed transaction does not raise serious doubts as to its compatibility with the
      internal market in the affected markets for accessory leather goods for women in the EEA and leather goods in Italy and in France.

V. CONCLUSION

  23) For the above reasons, the Commission has decided not to oppose the notified operation and to  declare  it  compatible  with  the  internal
      market and with the functioning of the EEA Agreement. This decisions is adopted in application of Article 6(1)(b) of the Merger Regulation.

                                        For the Commission
                                        (signed)

                                        Joaquín ALMUNIA
                                        Vice-President

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[1]   OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
      ('TFEU') has introduced certain changes, such as the replacement of 'Community' by 'Union' and 'common market' by  'internal  market'.  The
      terminology of the TFEU will be used throughout this decision.

[2]   OJ C 303, 19.10.2013, p. 27.

[3]   For the purpose of calculating LVMH’s market shares, all Groupe Arnault’s activities have been considered.

[4]   Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission     Consolidated Jurisdictional Notice (OJ
      C95, 16.04.2008, p1).

[5]   Including LVMH.

[6]   Groupe Arnault: EUR[…] million; Loro Piana: EUR […] million.

[7]   Groupe Arnault: EUR […] million; Loro Piana: EUR […] million.

[8]   Groupe Arnault: EUR […] million; Loro Piana: EUR […] million.

[9]   Case No COMP/M.6212 – LVMH/Bulgari, Commission Decision of 29.06.2011, paragraph 15.

[10]  The following potential sub-segments of the fashion and leather goods category were also considered, among others: (i) leather goods, (ii)
      women bags, (iii) men bags, (iv) accessory leather goods for men, (v) accessory leather goods for women - Case No COMP/M.6212 –
      LVMH/Bulgari, ibidem, paragraph 17, footnote 12.

[11]  Case No COMP/M.6212 – LVMH/Bulgari, ibidem, paragraph 17.

[12]  Responses to question 5 of the Questionnaire to competitors.

[13]  Responses to question 7 of the Questionnaire to competitors.

[14]  Responses to question 6 of the Questionnaire to competitors.

[15]  Response to question 6.1 of the Questionnaire to competitors.

[16]  Case No COMP/M.6212 – LVMH/Bulgari, Commission Decision of 29.06.2011, paragraph 27; Case No  COMP/M.1780  –  LVMH/Prada/Fendi,  Commission
      Decision of 25.05.2000; paragraph 14; Case No COMP/M.1534 – Pinault-Printemps-Redoute/Gucci, Commission Decision of  22.07.1999,  paragraph
      12.

[17]  In the overall production and sale of luxury goods, the Parties reached a combined market share of [5-10]% (Groupe Arnault:  [5-10]%,  Loro
      Piana: [0-5]%) at the worldwide level and [5-10]% (Groupe Arnault: [5-10]%, Loro Piana: [0-5]%) at the EEA-level in 2012. At  the  national
      level, the highest market share in 2012 was reached in France where the Parties achieved a combined market share of [10-20]%.

[18]  In particular, the combined market share of the Parties in fashion and leather goods is: [5-10]% worldwide and [5-10]% in the EEA.  At  the
      national level, the highest market share in 2012 was reached in Italy where the Parties achieved a combined market share of [10-20]%.  Loro
      Piana is not active in jewels, watches, perfumes or cosmetics.

[19]  A further category considered during the assessment was that of small leather items.

[20]  The market shares are the Parties' best estimates on the basis of retail data. Due to the fact that the  Parties  are  to  a  large  extent
      vertically integrated, the Notifying Party claims that their market shares at wholesale level are not greater than at the retail level

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 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004
 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the
 information omitted has been replaced by ranges of figures or a general description.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE