Switzerland’s competition regulator said it had extended by one year an agreement allowing Swatch Group AG to reduce deliveries of components to rival watchmakers, while the regulatory body investigates the company’s plans to phase out its supply of parts entirely.
Swatch Group chief executive officer Nick Hayek has stated repeatedly his intention to wean other brands from their dependence on ETA, the Swatch Group subsidiary that supplies watch movements to most of the industry, in the interests of promoting research and development.
The Swiss Federal Competition Commission, or Comco, in June 2011 opened an inquiry into whether shutting off supply to third parties would constitute an abuse of Swatch Group’s dominant position, in violation of competition law. It expects to complete its probe in the second half of 2012.
Comco said Tuesday the investigation was following its course, but it had decided to prolong the temporary provisions governing Swatch’s deliveries into 2013 in order to allow other firms to plan ahead. “This is necessary given that movements are ordered months ahead of time,” it noted.
Biel-based Swatch Group, whose 19 brands run the gamut from luxury Breguet timepieces to affordable plastic Swatch watches, has been given the green light to reduce the supply of mechanical movements this year to 85 percent of 2010 levels, and its deliveries of assortments to 95 percent of the quantities acquired in 2010. Those levels will now also apply for 2013, Comco said.
Swatch Group took note of the decision. “The Swatch Group understands that [Comco] needs time to thoroughly do their investigation, initiated by Swatch Group last year. Yet we hope that the final decision will be taken by the end of 2012,” it stated.
Supply shortages are one of the main challenges facing the world’s biggest watchmaker this year after sales hit a record 7.1 billion Swiss francs, or $8.1 billion, in 2011, up 11 percent versus the previous year.