Swatch Group’s bid to slacken the deliveries of mechanical movements and their components to rival watchmakers. was granted by A Swiss court on December 19, 20011. Nine companies, including luxury watch brands Frédérique Constant and Raymond Weil, in addition to movement manufacturer Sellita unsuccessfully appealed in the Federal Administrative Court in Bern against a ruling by Switzerland’s competition regulator in June that authorizes Swatch Group, the world’s largest watchmaker, to reduce its supply of parts in 2012. Read More
The plaintiffs grounded their appeal on the strain the reduction would place on smaller businesses, “The court’s decision left independent brands with no choice but to produce the parts themselves” Peter Stas, co-founder and chief executive officer of Frédérique Constant said, “This is going to take years, so before 2014, 2015, there is no solution, and it is for this period in between that normally companies like ourselves, the smaller ones, are protected.”
But for Swatch, the reduction would help bolster their own brand by enabling them to channel the movements it produces for its own brands like Longines, Omega and Breguet, in addition to charging a higher price for its movements. However, because of Swatch’s domination in the market, supplying 70% to 80% of to the Swiss watch industry’s movements, it would violate the Swiss Cartel Act if it were to independently terminate the supply.
Under the agreement, Swatch can next year reduce the supply of movements to 85% and other components to 95% of 2010 levels, while the competition commission carries out an investigation. Swiss Competition Authority deputy director Patrik Ducrey said the investigation was still ongoing, and would likely be concluded in the second half of 2012.
Swatch Chief Executive Nick Hayek said the decision to reduce supply would strengthen, not weaken the industry. “We do not want to be a supermarket, forced to deliver to everyone whatever they want. The supermarket era is coming to an end,” he told Dow Jones Newswires.
