This is Part 1 of a series on the Luxottica corporation and how its monopolistic behavior is damaging the industry of designing, manufacturing, and selling sunglasses.
The sunglass market is rigged. A monopoly lurks in the shadows, creating cornucopian display cases brimming with sunglasses of every brand and variety. What you don’t know is they’re all made by the same giant corporation: Luxottica.
“Luxottica's domination and carefully crafted illusion of competition has cemented its role as "price maker"…[which] results in routinely pricing for $200 or more glasses that cost less than $30 to make”
Kansas City Legal Examiner, Oct ’12
Luxottica owns several brands outright and licenses numerous others. Ray-Ban, founded in America in 1937 to make sunglasses for Air Force pilots, was acquired by Luxottica for $640 million in 1999. Oakley was founded in 1975, and after pricing disputes in the late 90’s and numerous legal battles, was acquired for $2.1 billion in 2007. Oliver Peoples was acquired by Oakley the prior year and was thereby included in the deal. Persol, a traditional Italian brand founded in 1917 was acquired by Luxottica in 1995. These classic brands are sold alongside the numerous other brands that Luxottica licenses.
Licensing a brand means that Luxottica has sole rights to design and manufacture all sunglasses sold under that brand’s name. The following are some major brands Luxottica licenses: Armani, Bulgari, Burberry, Chanel, Coach, Dolce & Gabbana, DKNY, Miu Miu, Polo, Paul Smith, Prada, Tiffany’s, Tory Burch, and Versace. The kicker? Luxottica acquired Sunglass Hut in 2001. Yes, THE Sunglass Hut. The every-mall-in-America, only-place-to-buy-sunglasses-on-earth Sunglass Hut.
To make the point very clear – Luxottica alone designs, manufactures, and distributes all of these brands, and then retails them across the world. 60 Minutes took an inside look at the corporation in October of last year to learn a little more about what this type of monopolistic integration means for consumers, and how it’s affecting the products and their pricing.
Why does it matter? How does this affect me, the guy/girl who just wants to buy some cool sunglasses? Part 2 of the series will address these questions and more.