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Resistance grows against supply constraintsWatchmakers to appeal against the Competition Commission

Supplier Swatch Group is to reduce its shipments of movements from 1 January 2012, with the blessing of the Competition Commission. Independent brands are furious. "What exactly is the Competition Commission for, apart from favouring monopolies?" Frédérique Constant CEO Peter Stas was openly angry following the decision of the Competition Commission (Comco) to authorise the Swatch Group to lower its shipments of movements (-15%), and assortments(-5%) to third companies.

A drop that will reach 30% for movement manufacturers, including Soprod and especially Sellita, the main competitors of ETA (owned by Swatch Group). His outrage was shared by Alain Spinedi, CEO of Louis Erard. "It's scandalous! We will end up with a stock of already ordered components on our hands but a shortage of movements. How can we guarantee our sales next year?"

Timing Controversy

What has angered independent watchmakers is not so much the Swatch Group policy as the timeline approved by the Competition Commission. These shipment restrictions will come into effect as early as 1 January 2012. A date that is much too early for other market players who manufacture movements. The main player, Sellita in La Chaux-de-Fonds, still partially depends on parts supplied by Nivarox, another Swatch Group entity, as well as on finished movements purchased from ETA. "Sellita will lose nearly 30% of its production," says Peter Stas. "Just as brands were beginning to turn increasingly towards us. This is a disaster that may have a serious impact on jobs, and opens the door to a Swatch Group takeover of the middle of the range, with its brands such as Tissot, Longines and Hamilton."

The incomprehension is all the greater given that the Competition Commission has not completed its consultation process, confides an observer. Peter Stas confirms having received an eight-page questionnaire a fortnight ago, with a July deadline for responses. "They have not taken this into account..." Meanwhile, the Competition Commission has affirmed that these are provisional measures. "We have decided to allow these limited reductions in shipments until the end of 2012, while we complete our survey. If we do not manage this, we will consider taking further provisional measures,"explained its president Vincent Martenet. Unfortunately, the situation is far from favourable.

"Given the strong franc, we are already having enough problems with our exports," points out Alain Spinedi. Could the Competition Commission not have taken this into account? "The calendar is not determined by us, but by the Swatch Group. Our measures are a response to its decisions," said Vincent Martenet.

"Is it really the Competition Commission’s purpose to ignore the independents?" says Peter Stas. Like other brands — not all as open about their views — Peter Stas intends to appeal. According to informed sources, the Sellita company is also preparing an appeal.