Swatch Group given free hand to supply watch movements

Mechanical watch movements are the mechanisms that make timepieces tick without a battery. © Keystone / Christian Beutler

Switzerland’s anti-trust regulator has decided to allow the Swatch Group to supply mechanical watch movements to whomever it wants as part of a deal to crack down on potentially abusive business practices.

Investigations found that other manufacturers of mechanical watch movements – the mechanisms that make timepieces tick without a battery – have emerged over the past few years, according to competition commission president Andreas Heinemann.

“Alternative suppliers of Swiss-made mechanical watch movements have effectively won ground,” he said at a press conference on Wednesday. “This means watchmaking companies have become less dependent on Swatch’s ETA unit.”

However, the commission cautioned that ETA remained dominant due to its production capacity and must not abuse this position. The ruling is subject to appeal.

Long battle

Under the deal struck in 2013, ETA had to phase out movement deliveries due to its strong market position but would no longer have an obligation to supply parts to other watchmaking companies.

The regulator in January imposed restrictions on Swatch Group, saying it needed more time to determine the impact of market liberalisation. The announcement prompted angry reaction from Swatch which threatened to sue the authorities for damages.

It is the latest stage in a long-standing conflict between Switzerland’s biggest watchmaker and its main competitor in mechanical watch movements, Sellita, and comes amid concerns that Swatch Group could use the new freedom to win back customers from alternative suppliers.

Experts say such a risk may have increased during the coronavirus pandemic as collapsing watch demand led to production overcapacity across the watchmaking industry.

Earlier this week, Swatch Group announced a 46% decline in sales and its first ever net loss the first of the current year.