Monopoly Case Study
Luxottica Group S.p.A is the world’s largest eyewear company. They head 12 eyewear sub-companies that everyone knows about, but never thought them to be owned by one single entity. Their brands include: Arnette, Eye Safety Systems, K&L, Luxottica, Mosley Tribes, Oakley, Oliver Peoples, Persol, Ray-Ban, Revo, Sferoflex, and Vogue. They also create eyewear designs for twenty top labels: Anne Klein, Brooks Brothers, Bulgari, Burberry, Chanel, Chaps, Club Monaco, D&G, DKNY, Donna Karan eyewear, Miu Miu, Polo Ralph Lauren, Prada, Ralph Lauren Purple Label, Salvatore Ferragamo, Stella McCartney, Tiffany & Co., Tory Burch, Versace, and Versus. The company wasn’t always so big, though. The founder, Leonardo Del Vecchio, started Luxottica Group in 1961 based out of Agordo, Italy. Later, he teamed up with a distribution company, Scarrone, and vertically integrated the enterprise. Luxottica expanded very quickly and signed its first deal with Armani in 1988. At this point, the company’s headquarters were in Milan and they had taken their business overseas to New York. Vogue, Persol, LensCrafters, Ray-Ban, and Sunglass Hut were the next to join this developing monopoly. Del Vecchio knew that if he bought up or signed deals with all the major brands he would own the sunglass market. Today, Luxottica group employs over 60,000 people and its total assets are worth over 12.5 billion dollars. They have also teamed up with EyeMed Insurance. This insurance company covers brands only made by Luxottica; so essentially, they have a part in the glasses market from every angle. They have 6400 U.S store locations, but since it is not an American-based company, the U.S cannot break it up. Even if they could, this is not a harmful monopoly. If anything, it’s beneficial because since they make such a large profit, they can afford to not charge a ridiculous amount for a pair of sunglasses. This increases the consumer surplus and lets the...
Please join StudyMode to read the full document