Swiss competition watchdog curbs Swatch watch movement shipments

TheSwisscompetitionwatchdogon Thursday restrictedSwatchGroup'sshipmentsofwatchmechanisms to other companies ahead of a final decision in mid-2020 in a long-running dispute.

The world's biggestwatchmaker is also an important supplier ofwatchmovements that power mechanical timepieces. If it cannot sell them,Swatchitself and its customers, from Cartier maker Richemont to independently owned Chopard and Breitling, may face problems.

Anti-trust agency WEKO said deliveries ofwatchmovements toSwatchGroup's existing customers would be suspended from January1, with an exception for small and mid-sized companies of up to 250 staff, until thewatchdogreaches a final decision.

Add WION as a Preferred Source

The decision creates uncertainty over supplies at a time whenSwisswatchmakers facecompetitionfrom smartwatches and slowing demand in key market Hong Kong.Swisswatchexport data on Thursday showedshipmentsto Hong Kong fell 27 per centin November.

Swatchshares were indicated 1.1 per centlower in pre-market trade.

ASwatchGroup spokesman said the lion's share of thewatchmovements sold bySwatch's ETA unit was absorbed by companies with more than 250 staff and the group expected not to be able to deliver anymovements to third parties next year.

WEKO Director Patrik Ducrey saidSwatchGroup was still allowed to supply smaller customers, but had to treat them all equally.

"Is there really going to be a shortage ofwatchmovements? I'm not sure. There's also a grey market and brands have built inventories," he told our sources.

SwatchGroup had said on Wednesday that it could seek damages.

The question of how to endSwatchGroup's historical quasi-monopoly on mechanicalwatchmovements has kept thecompetitionauthority busy for years.

WEKO andSwatchstruck a deal in 2013 under which the company known for high-end Omega and colourful plasticwatches agreed to gradually phase outmovementsupplies to the rest of the industry by the end of 2019 and would have been free to choose its customers and prices from 2020.

Swatchitself had initiated the change at the time, saying it no longer wanted to serve as a "supermarket" for other brands, but had to keep supplying rivals for several years because of its dominant market position.

Privately owned Sellita has since emerged as the main alternative supplier.SwatchGroup said in its statement on Wednesday Sellita would benefit from WEKO's decision.

Sellita and Richemont could not immediately be reached for comment.