The Swiss competition watchdog recently made a bold move by restricting Swatch Group’s shipments of watch movements to other companies, creating a stir in the watchmaking industry. This action comes amid a longstanding dispute and sets the stage for a final ruling expected in mid-2020, potentially shaking up the world’s largest watchmaker and its clientele.
Swatch Group, known for its essential role as a supplier of watch mechanisms, faces a significant challenge as the suspension in shipments could have far-reaching consequences not only for the company itself but also for its diverse customer base. From luxury brands like Cartier under Richemont to independent watchmakers like Chopard and Breitling, the impact of this decision could potentially disrupt the supply chain at a crucial time for the industry.
The Swiss Competition Authority, WEKO, clarified that while existing customers will still receive shipments until January 1, larger companies with over 250 employees will face a suspension. This measure raises concerns about the availability of watch movements as Swiss watchmakers already battle with heightened competition from smartwatches and shrinking demand in key markets such as Hong Kong.
The recent data showing a significant decline in watch shipments to Hong Kong signals the challenges that the industry is grappling with. The decision by WEKO has already led to a decrease in Swatch Group’s shares, indicating the immediate impact of this ruling. A spokesperson from Swatch Group revealed that the majority of watch movements sold by the company’s ETA unit are bought by larger corporations, hinting at potential difficulties in supplying movements to third parties in the upcoming year.
The longstanding issue of breaking Swatch Group’s monopoly on watch movements has been a major focus for the competition authority, with a prior agreement set in 2013 to phase out movement supplies by the end of 2019. However, WEKO’s recent move to restrict shipments shines a light on the ongoing challenges within the industry.
In response to the ruling, Sellita, a privately-owned company, emerges as a potential alternative supplier. Swatch Group acknowledged that Sellita could benefit from this decision, signaling a potential shift in the watchmaking landscape. As the situation continues to evolve, the watchmaking industry will need to adapt to these changes and navigate new pathways to ensure its sustainability and growth.
