Business Law (International Law)
The international legal issue that will come into play with regard to the international transactions entered into by Luxottica is market monopoly. Luxottica Group is the largest eyewear company in the world. It designs and manufactures stylish specs/glasses for several companies including Prada, Tiffany, Dolce & Gabbana, Ralph Lauren among others, and has control over a huge chunk of the business. Approximately 500 million people are wearing their specs at any moment. It bought and owns two premium brands, Ray-Ban – the best selling sun-glass brand worldwide – and Oakley (CBS News, 2012). Because of monopolizing the market, it raked in $8 billion in 2011.
Not only did Luxottica buy Ray-Ban, but also LensCrafters, the leading eyewear retail chain in the entire North America. At LensCrafters, the average price of specs is nearly $300, and the optical products are largely from Luxottica. There is no choice for other glasses and customers are not given a break from Luxottica products hence monopolizing the market. Other large eyewear retail chains owned by Luxottica are Pearle Vision, Target optical, Sears optical and Oliver Peoples. Moreover, the company also owns several boutique chains such as Ilori. Sunglass Hut, the biggest sunglass chain on the globe is also owned by Luxottica. There is no free market in the eyewear industry since Luxottica has extreme dominance over other players in the market. Oakley was the company’s biggest competitor. They tried to compete but lost, and then Luxottica bought them (CBS News, 2012). As such, it owns the two premium brands of sunglass in the world, Oakley and Ray-Ban. This ensures that Luxottica continues to dominate and monopolize the international specs and sunglass market.
Their biggest competitors in the United States are Costco, Wal-Mart and upcoming online companies such as Warby Parker. Nevertheless, Luxottica still dominates the market in such a way that if other manufacturers make glasses, they would have to be in Luxottica’s stores, and if other companies possess stores, they would have to sell Luxottica’s Ray-Ban glasses. As such, Luxottica could set prices of specs/glasses as high as it desires. As a price-maker, it sets prices and other companies will follow, thus making glasses in general to cost very much. Insurance companies covering vision also do not complain since Luxottica owns one of the country’s leading vision care plan, EyeMed, which covers glasses and eye exams (CBS News, 2012).
In conclusion, a vast majority of specs are made by a single corporation and a single corporation owns nearly all the specs/glasses retail stores – this single corporation is Luxottica Group. This creates an international legal issue in the sense that people in most countries will be forced to buy specs/glasses made by Luxottica since it controls both the manufacturing and sale of glasses/specs. The company is the largest manufacturer of glasses in the world and owns the largest retail chains/stores worldwide, hence giving people little option to buy specs/glasses from other companies.
Reference
CBS News. 2012. 60 Minutes. Retrieved from http://www.cbsnews.com/video/watch/?id=7424700n
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