By Yoon Ja-young
SEJONG CITY ― The Fair Trade Commission (FTC) rejected the takeover of a local glass lens company by Essilor Amera Investment, the biggest player in the global market. This is the first rejection of a corporate takeover since 2009.
The commission said that it decided to prohibit Essilor's acquisition of Daemyung Optical on the grounds that the takeover could hinder market competition.
"We determined that if Essilor acquires Daemyung, it is likely to raise lens prices and abuse its dominance of the market," the commission said.
Headquartered in France, Essilor is the biggest glass lens company in the world with a 47-percent global market share. It signed a deal to acquire a 50-percent stake in Daemyung in January of last year, and reported the merger to the commission after two months.
In 2002 it acquired Chemi Glass, a local competitor of Daemyung. Currently, Essilor has Essilor Korea, Chemi Glass and Deco Vision as its subsidiaries.
Were the acquisition allowed, Essilor would have become the most dominant force in the short focus lens market, with a combined market share of 66.3 percent. That means its market share will be six times bigger than that of the second biggest competitor, Hanmi Swiss Optical.
It will also be the top player of the progressive multifocal lens market with a 46.2-percent share, according to the commission.
"Daemyung has been leading the price competition during the past 10 years in the short focus lens market, stabilizing prices…we expect this measure will prevent the local company from becoming a mere supplier of the global company and help maintain the competition structure," the commission explained in the media briefing.
Daemyung has also had its market share doubled in the progressive multifocal lens market during the past five years, now taking 12.8 percent of the market.
The commission said its presence has pressured high-priced foreign brands like Hoya of Japan, Carl Zeiss, and Essilor to lower prices. A survey of opticians also showed that the acquisition is likely to raise lens prices.
The country's glass lens market is estimated at around 600 to 700 billion won, with half of Korean adults wearing glasses or contact lenses.
The commission said that it is the first rejection of a corporate merger since 2009, when it banned the takeover of Paradise Global Duty Free Shop by Lotte Hotel.
