Swatch Ordered to Supply the Competition

A decision by a subsidiary of watch giant Swatch to stop supplying the key part of watch mechanisms to other manufacturers by 2006 has been reversed after a two year investigation that has led to a compromise on the issue.

Swatch subsidiary ETA, the leading producer in the world of movement blanks – the vital element of the watch mechanism, faced the Swiss Competition Commission on the grounds that it had a dominant position in the making of the elements in the price range of up to $256.

The Commission ruled on Friday that stopping the supply of the parts was in breach of cartel law since there are no alternative manufacturers.

ETA had planned to manufacture exclusively for the Swatch group, but under the terms of a compromise the company will continue to supply movement blanks until 2008 and has until 2010 to gradually reduce its supply of parts.

Swiss regulators feared the move would adversely affect local watchmakers, and hope the agreement will give them enough time to adjust to change.