Watchmaker Swatch has finally been given permission to gradually reduce, and eventually stop, its supply of watch parts to Swiss rivals, following the reversal of a decision made in July by the Swiss competition authority, known as Comco in French and Weko in German.
Last week it was announced that an agreement has been reached that in the next two years Swatch will deliver just 75% of parts to rival companies from its average levels between 2009 and 2011. The supply of parts will then be dropped further to 65% in the years 2016 and 2017 and to 55% in 2018 and 2019.
Swatch will no longer have to sell its ETA watch parts to any other company from December 31, 2019.
This final agreement includes a clause from Comco to protect "hardship" cases where the denial of parts might be seriously detrimental to smaller companies. It also said that if the market develops differently to expectations then it has the right to reassess the conditions.
Back in July, Comco rejected an attempted settlement with the Swatch Group over the issue and this latest agreement is a renegotiation.
A statement from the Swatch Group on the latest decision said: "The Swatch Group considers the Competition Commission’s decision to be a positive, albeit tentative, first step toward finally making it clear to all the brands and groups in the Swiss watch industry that they have to invest in their own mechanical movements and assume the associated industrial risk themselves. This is not a luxury but a step necessary for the long-term success of the Swiss watch industry."
Swatch currently produces approximately 60% of the movements used by Swiss watchmakers and the Swiss Cartel Act has been in place to stop the company cutting supplies. Swatch has been trying to reduce the level at which it has to supply critical components to rival Swiss watchmakers for the last few years.