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Swiss Watch CEO Lauds Competition Ruling

Frédérique Constant chief executive officer notes ruling against Swatch Group will help smaller firms.

PARIS — The head of Swiss watch brand Frédérique Constant on Tuesday praised a decision by Switzerland’s competition regulator to reject an agreement that would have allowed Swatch Group AG to cut back on deliveries of key components to rival watchmakers.

Peter Stas, co-founder and chief executive officer of Frédérique Constant, said the ruling would give independent brands time to continue developing their own mechanical movements, or calibers, and prevent them from having to seek foreign suppliers for essential regulating mechanisms like high-tech hairsprings.

“We feel it is the right decision for the Swiss watch industry on a number of levels,” Stas told WWD via e-mail. “It creates at least temporarily clarity and stability after an acrimonious fight within the Swiss watch industry.”

With the exception of Swatch Group, leading industry players have yet to react to Friday’s announcement by the Swiss Federal Competition Commission, or Comco, that it has rejected an agreement struck between its Secretariat and Swatch Group.

Nick Hayek, ceo of Swatch Group, said he regretted the ruling, which allows Swatch Group in principle to continue cutting its delivery of mechanical movements in a gradual way and under certain conditions, but halts any reduction in the supply of assortments.

Frédérique Constant was one of nine companies that appealed a temporary decision by Comco in 2011 authorizing Swatch Group to trim its supply of parts. They argued the sudden reduction in supply could put smaller brands out of business, but the Federal Administrative Court in Bern rejected the appeal in December 2011.

Stas said Frédérique Constant plans to continue investing in expanding its caliber production. “With the Comco decision, we hope that we can concentrate again on development and production of mechanical movements and watches,” he said.

The Comco decision reestablishes Nivarox, the Swatch Group division that produces oscillating and escapement parts, as the long-term supplier for Swiss-made hairsprings, or spirals, produced in large quantities, Stas said.

“For Swiss-made spirals, Nivarox is the only company who can produce spirals at reasonable cost because of history and economies of scale,” he argued.

Hayek has contended the easy availability of his group’s components has made rivals disinclined to invest in their own production capacity, and allowed them to divert spending to marketing and store networks instead.