As we reported in October, Switzerland’s Competition Commission (Comco) has announced a decision to allow the Swatch Group, Switzerland’s dominant producer of mechanical watch movements, to gradually halt sales of those movements to companies outside the group in 2020. Here is a timeline of 10 key moments in the ongoing legal soap opera between Swatch Group and Comco.
August 2002: ETA SA, the Swatch Group’s movement-making subsidiary, announces that it will stop supplying kits of loose movement components for mechanical watches, called ébauches, to third parties. It plans to reduce quantities gradually over three years and halt sales as of January 1, 2006. ETA says that the ébauches business represents less than two percent of Swatch Group total sales and “the logistics are much too expensive and complex to maintain such supply.”
October, 2002: Switzerland’s Competition Commission (Comco) announces a preliminary investigation into whether ETA is abusing its dominant position in the market for mechanical movements and parts by discontinuing the supply of ébauches as of January 2006.
November, 2002: Comco announces it is opening a formal investigation of ETA.
2004: Comco launches a preliminary investigation into whether the Swatch Group subsidiary Nivarox-FAR is abusing its dominant position in the market for hairsprings and escapement assortments. It concludes that “no abusive conduct was confirmed during the two previous years under consideration” and finds no cause to pursue a formal investigation.
November 19, 2004: Comco announces its finding in the formal investigation of ETA. It declares that ETA holds a dominant position in the Swiss mechanical movements and parts market with approximately a 75 percent market share. “The termination of supplies has to be regarded as an unlawful refusal to do business and therefore as an abusive practice. For numerous competitors, the implementation of the phasing-out within such a short time meant in practical terms that they had been deprived of the basis for their business activity, as there was no alternative supplier. In an amicable settlement, ETA has undertaken to supply the ébauches until the end of 2008 at the current volume and thereafter for two years at a reduced volume. This will create a situation in which alternative production plants may be set up.”
August, 2005: In the wake of the amicable agreement with Comco, the Swatch Group issues a statement noting “without the Swatch Group Ltd., the Swiss watch industry would not exist anymore. The Swatch Group Ltd. remains as committed as ever to promoting and supporting the highest standards of Swiss-made watches, and the finest traditions of Swiss watchmaking. ETA SA will continue to supply complete mechanical movements to its customers, as it has done for mechanical and quartz movements for many, many years.”
November 2008: ETA announces a price increase of 5 to 12 percent on its mechanical movements and the elimination of the 3 percent discount for payments within 10 days.
November 28, 2008: Comco announces that having “received miscellaneous reports,” it will start a preliminary investigation into whether ETA’s decision to amend prices and conditions is an abuse of its dominant position in the mechanical movement market.
September 15, 2009: Comco announces that its preliminary investigation into ETA’s price increase merited the launch of a formal investigation. Comco says among the issues it will examine is whether ETA sold movements to sister companies within the Swatch Group at terms more favorable than to firms outside the group. The Swatch Group issues a statement calling the timing of the investigation “unfortunate.” “Since approximately one year, the majority of the external ETA clients have massively cancelled or postponed orders, without any consideration for ETA personnel, its infrastructure, nor the investments which have been considerable at ETA due to the continuous pressure of the Comco as a consequence of the complaints from third parties.”
January 1, 2011: In keeping with its 2004 agreement with Comco, ETA will cease supplying ébauches to third parties.