Swatch's obligation to provide movements to third-party watchmakers will end after 2019
Swatch ordered to continue movement supply
2.9 k views | Posted November 19, 2013 |
By Emily Mobbs • Former Editor
After what could be considered a long period of uncertainty,
Switzerland’s competition authority has confirmed that Swatch Group must
continue supplying third-party watchmakers with some finished movements
until the end of 2019.
Competition Commission (COMCO) had been investigating the issue since June 2011, which is when the watch company initially requested to reduce supplies of mechanical watch movements and movement parts.
As previously reported by Jeweller, the world’s largest watchmaker was said to have felt that it was spending too much time and money on developing movements while other companies that manufacture competitor brands were pouring resources into marketing.
The group’s ETA subsidiary reportedly produces about two-thirds of all mechanical movements in Switzerland.
In July this year, COMCO ruled that Swatch would be allowed to cut the number of mechanical movements it supplies to competing watchmakers by 10 per cent in 2014. The company was instructed to negotiate a new deal for reducing deliveries beyond that.
However, the latest decision specifies that, using the average number of movements supplied per year in 2009 to 2011 as a baseline, the watchmaker will supply 75 per cent of those movements in 2014 and 2015, 65 per cent in 2016 and 2017 and 55 per cent in 2018 and 2019. After 31 December 2019, its obligation to provide movements will end.
A spokesperson for Swatch told Jeweller, “Swatch Group considers the Competition Commission's decision to be a positive, albeit tentative, first step toward finally making it clear to all the brands and groups in the Swiss watch industry that they have to invest in their own mechanical movements and assume the associated industrial risk themselves. This is not a luxury but a step necessary for the long-term success of the Swiss watch industry.”
The Foundation de la Haute Horlogerie has reported that Swatch would “pick and choose” its customers from 2020. Its website states, “The Biel-based giant will of course continue to supply movements to companies outside the group as its own portfolio of brands cannot at the present time absorb its entire production”.
There are no plans to reduce supplies of assortments.
Background reading
Swatch forced to ease component restrictions
Swatch Group continues restrictions
Australian watchmakers take a stand
Swatch trims watch supplies to rivals