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Reduced deliveries from Swatch: the situation becomes clearer

The Federal Competition Commission has reached a preliminary agreement with the Swatch Group concerning its plan to reduce its deliveries of movements and components to third-party watchmakers. The consultation document has now been issued and is already provoking strong reactions.
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    In 2014-2015 the Swatch Group will supply only 70% of the volume it delivered in 2010 (illustration: calibre ETA 2896) © ETAs
    In 2014-2015 the Swatch Group will supply only 70% of the volume it delivered in 2010 (illustration: calibre ETA 2896) © ETAs
By : Christophe Roulet
Published in : HH Magazine
07.24.2012

There has been a lot of talk about this matter for some time. In fact, it began as soon as the Swatch Group informed the Federal Competition Commission (COMCO) of its plans to steadily reduce its supply of movements and components to other companies. Inevitably, such a proposal led, one year later, to an enquiry by COMCO into possible abuse of a market-dominant position and the introduction of provisional measures. Meanwhile, according to recent reports on the internet, things have been moving rapidly with the Swatch Group and COMCO reaching a preliminary agreement that is currently being discussed with the companies concerned. These are only preliminary proposals that can still be amended, but at least the broad principles have been put down on paper.

The document has been partially revealed on the Business Montres website. It indicates that in 2014-2015 the Swatch Group will supply only 70% of the volume it delivered in 2010, 50% in the following two years, and 30% after that. An even more drastic reduction is planned for calibres bought and modified by the group’s customers: volume cut by 50% in 2014 and by 75% in the following year. The assortments, mainly regulating organs of mechanical watches, would be reduced by 10%-20% every two years for a total reduction of 70% by 2022. The group’s prices for these components would be allowed to rise by 5% in the 2014-2018 period and afterwards the increase would be fixed at 10%. The document also states that the price of movements could rise with no limit being fixed.

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