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Case No COMP/M.7020 - LVMH/ LORO PIANA

Only the English text is available and authentic.

REGULATION (EC) No 139/2004

MERGER PROCEDURE

Article 6(1)(b) NON-OPPOSITION

Date: 15/11/2013

In electronic form on the EUR-Lex website under document

number 32013M7020

Office for Publications of the European Union

L-2985 Luxembourg

EUROPEAN COMMISSION

Brussels, 15.11.2013 C(2013) 8141 final

In the published version of this decision, some

information has been omitted pursuant to Article

PUBLIC VERSION

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omitted has been replaced by ranges of figures or a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.

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 139/20041

(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 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– 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 (Groupe Arnault: EUR […] million, Loro Piana: EUR […] million). In each of

France, Italy and the United Kingdom 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, 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. The

Commission has also previously considered whether a distinction between wholesale and retail

sales of luxury products should be made.

(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. The market investigation was, however, inconclusive whether further

subdivision of the market should be made on the basis of gender or between the categories of

(i) luxury accessories (such as belts, gloves etc.), (ii) luxury bags and (iii) luxury shoes. One

of the respondents also mentioned a potential category of small leather goods, which would

include small bags, wallets or credit card holders.

Relevant geographic markets

(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) 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. 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) 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, 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]%).

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]%

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.

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

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

(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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