Watch firm agrees to supply competitors

The Swiss regulator reined in the world's leading producer of movement blanks Keystone

The Swiss Competition Commission says a subsidiary of the Swatch Group will continue to deliver movement blanks to other watchmakers.

The announcement ends a two-year investigation into the dispute which started after ETA announced plans to produce exclusively for the Swatch Group.

The Competition Commission said ETA had agreed to deliver movement blanks, which are key elements for watches, for another six years.

In a statement released on Friday, the regulator said ETA had a dominant market position for movement blanks in the price range of up to SFr300 ($256) and that there were currently no alternatives.

The Commission therefore concluded that ETA’s announcement in 2002 that it would stop the delivery of movement blanks to third parties until 2006 was in breach of the law on cartels.

Nicolas Hayek, the head of the Swatch Group, had argued that ETA was overwhelmed with orders and that its movement blanks were sometimes ending up in fake watches.

But the regulator said that stopping deliveries to third parties would have threatened the future of many small watchmakers in Switzerland.

Compromise

Under a compromise, ETA pledged to keep up the delivery of movement blanks up to 2008 and gradually reduce it until 2010.

The regulator said the agreement gave small watchmaking companies in Switzerland enough time to adapt to the market and look for new producers.

Movement blanks are used as a base material for watch producers who then add their own components.

ETA is the leading producer of movement blanks in the world and is considered a key element of the Swiss watchmaking industry.

The Swatch Group is the largest watchmaking concern in the world and includes the Breguet, Blancpain, Omega, Longines and Swatch brands.

swissinfo with agencies

Key facts

ETA is a key company of the Swatch Group and the world’s leading producer of movement blanks. It has 8,000 employees.
A movement blank is an incomplete watch movement which is sold as a set of loose parts.
It comprises the main plate, the bridges, the train, the winding and setting mechanism and the regulator.