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Swatch Investigated by Antitrust Watchdog Group

Swatch Group said Tuesday one of its units is facing an antitrust investigation in Switzerland.

PARIS — Swatch Group said Tuesday one of its units is facing an antitrust investigation in Switzerland.

This story first appeared in the September 16, 2009 issue of WWD.  Subscribe Today.

The Swiss antitrust watchdog is investigating whether recent price increases introduced by ETA Manufacture Horlogere Suisse SA have violated antitrust laws. The unit, which has been the subject of other probes, supplies watch movements to Swatch as well as independent watchmakers.

Swatch Group said it’s confident the results of this investigation will again be positive for ETA.

“However, the timing for such an investigation seems unfortunate,” Swatch added, noting that in the last year, “the majority of external ETA clients have massively canceled or postponed their orders.”

Independent watchmakers have reduced orders for components as the entire Swiss watch industry faces the effects of the recession, which has led to the sharpest drop in demand in 20 years.

The Swiss watch industry has been in decline since the end of 2008, after five years of strong growth, with exports currently below 2006 levels. Since January, watch exports have fallen 26.3 percent to 7.3 billion francs, or $6.8 billion, reflecting wilting demand for expensive timepieces. Dollar figures are converted at average exchange rates for the periods to which they refer.

As a result, several Swiss watchmakers have laid off staff in a move to reduce costs. In June, luxury watchmaker Zenith said it had begun consultations to reduce its 220-strong staff, while Geneva-based Franck Muller eliminated almost half of its 428-person workforce.

Nevertheless, Swatch Group is predicting a pickup in demand for its timepieces in the second half, after sales and order levels began to show signs of recovery.