One company that has taken over its respective industry and could continue to grow even further is Luxottica which is the world's largest company in the eyewear industry.
Luxottica is a vertically integrated company that designs, manufactures, distributes, and retails its own eyewear brands. Although you may have not heard of Luxottica, I guarantee you've heard of some of their sunglasses brand that include Ray Bans, LensCrafters, Sunglass Hut, Oakley and many more. They also make eyewear under license for brands such as Prada, Versace, Chanel, and much more. On top of that, they partnered with Google to help create the Google Glass and integrate it into their eyewear.
As of right now, Luxottica design 80% of the major brands in the global eyeglasses industry. This allows them to change prices as they feel given the fact that they control so much of the market which fits the definition of a monopoly. For example it is shown that since Luxottica bought Ray Bans, their prices have increased yearly and so has Luxottica's profit margins. On top of that Luxottica recently announced that they are merging with Essilor, a lead manufacturer in optical lenses, to create EssilorLuxottica. This would result in a combined market capitalization of €57 billion or about $65 billion. They can also control 83% of optometrists due to Luxottica's EyeMed Vision Care company which is the second largest vision benefits company in the United States that offers the largest network of eye care providers.
Although they technically aren't a monopoly yet, it is clear to see why they may become one in the future given their large size. Luxottica along with Essilor dominate a large market share leaving less room for other competitors. This would allow them to continue to adjust prices as they see fit and making it hard to enter the market given their sheer size.
Works Cited:
https://en.wikipedia.org/wiki/Luxottica
https://www.forbes.com/sites/anaswanson/2014/09/10/meet-the-four-eyed-eight-tentacled-monopoly-that-is-making-your-glasses-so-expensive/#1f1ffe6b66b8
https://thehill.com/opinion/healthcare/362146-get-ready-to-pay-when-one-company-dominates-the-eyeglass-market
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This post helps bring attention to the problems of monopoly in markets, especially when we are unaware with the monopoly like in the eyeglass industry. Luxottica and Essilor create fake competition between the brands that they own so it creates the effect of monopolistic competition, yet they can jack up the prices and hurt consumers. And because Luxottica isn't the big name itself, as most people haven't heard of it, antitrust enforcers are less likely to try to go after the company.
ReplyDeleteIts very interesting to see how much influence an eyewear company can have. It very alarming to think that they would not only have control over the sunglasses industry, but also the optometry industry. However, it seems like not many people would be concerned with a sunglasses company becoming a monopoly. Do you think that they are going to end up being regulated or will they be free to control all of the eyewear industry?
ReplyDeleteI think this post brings up a very interesting topic of how companies can be fake to their loyal customers. Luxottica has recently addressed the accusation that they were becoming a monopoly, and denied it. In an article by Forbes quoting Luxottica, they said, "Of the close to 1 billion pairs of glasses sold worldwide last year, only 93 million of them were produced by Luxottica - less than 10%." I think that this statement is contrary to some of the points you bring up in your post, and shows how manipulative a company can be.
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