It came as a body blow to the industry a few years ago, and now it’s becoming a reality. Watchmakers, watch marketers and ETA movement makers and suppliers the mighty Swatch Group will no longer have to sell its ETA watch parts to any other company as from December 31, 2019. Permission has been granted to gradually reduce, and ultimately cease supply of watch parts to its Swiss rivals. The agreement follows the reversal of a decision first made in July by the Swiss competition authority, known as Comco in French and Weko in German.
Over the next two years Swatch will be expected to deliver just 75% of parts to rival companies from average levels between 2009 and 2011. The supply of parts will then be dropped further to 65% in the years 2016 and 2017 and to 55% in 2018 and 2019.
A clause in the agreement is designed protect "hardship" cases where the denial of parts might be detrimental, even disastrous to smaller companies. Also, the agreement may be reassessed if market conditions evolve differently in the years to come.
The permission has been granted after Comco initially rejected a deal with the Swatch Group back in July over the issue and the latest agreement has be renegotiated. Presently Swatch supplies around 60% of the movements used by the Swiss watchmaking industry and the Swiss Cartel Act was put in place to stop the company cutting supplies. Swatch initially expressed a desire to reduce the levels of supply to other companies under the aegis of their late Chairman Nicolas Hayek.
Commenting on the latest decision the Swatch Group said:"The Swatch Group considers the Competition Commission's decision to be a positive, albeit a 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."
In recent years several high-end brands have started to focus on developing their own in-house movements, or developing or adapting movements based on some of the ETA hardworking standards such as the ETA 2824-2 or 7750 for chronographs. ETA has 20 production sites located in the foothills of Jura and the Swiss cantons of Valais and Ticino. Their production and assembly of movements and watches are considered global benchmarks for their reliability and performance.
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