Swatch Group’s ETA has been cleared to supply movements to any other watch brand in a reversal of its position by Swiss competition watchdog WEKO.
In a complete victory for the company, the only limit on its freedom is that WEKO says it will not be allowed to abuse its dominant market position by undercutting rivals’ prices, the default position for every supplier in all industries.
WEKO’s latest ruling brings a seven year saga for ETA, which had agreed in 2013 to reduce the volume of movements it supplied to watch brands outside Swatch Group in a move designed to stimulate production of movements by other companies, increase competition and drive innovation.
That agreement was due to expire this year, leaving ETA free to ramp up sales, but an interim order at the end of last year cast doubt on whether that freedom would be restored in 2020.
This week’s settlement, which has helped Swatch Group shares to rise by 12% over the past week, is a recognition that competition from the likes of Sellita and Ronda has increased over the past seven years while many more brands have diversified away from single suppliers like ETA or started to make their own movements.
Concerns remain that, with a slump in demand this year caused by the Covid-19 pandemic, ETA could flood the market with product and undermine competitors. WEKO addressed that issue with a statement saying the industry had years to prepare for this and Swatch would not be allowed to abuse its position.