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http://www.bloomberg.com/news/2011-06-0 ... eries.html

Swatch Group AG (UHR), the biggest maker of Swiss watch motors, will be allowed to start reducing deliveries to competing timepiece manufacturers next year as it seeks to end a regulatory requirement that it sell components to rivals.

Swatch, the Biel, Switzerland-based maker of the Omega and Breguet brands, will be permitted to scale back sales of mechanical movements to third parties to 85 percent of the level sold in 2010, the country’s competition regulator, Comco, said today in a statement.

The world’s biggest watchmaker has been required to supply movements to third parties because of its dominant position. Swatch’s ETA unit manufactures as many as 80 percent of the mechanisms made in Switzerland, according to a Sanford C. Bernstein estimate. Swatch has sought permission from Comco since 2009 to choose who it sells movements to.

The company has shown that it’s willing to accept a “gradual” solution, Comco said.

Swatch rose as much as 40 centimes, or 0.1 percent, to 403.60 Swiss francs and was trading at 403.50 francs as of 9:48 a.m. in Zurich.

Next year’s permitted reduction in motor deliveries forms a provisional measure while the regulator conducts an investigation into the matter, Comco said.

To contact the reporters on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net; Paul Jarvis in London at pjarvis@bloomberg.net.

To contact the editor responsible for this story: Paul Verschuur at pverschuur@bloomberg.net

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"I don't own any watches, I just lease them"

Does anyone here own the stock?

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Alex
Breitling - Navitimer
Breitling - SuperOcean
Breitling - Chrono SuperOcean

I talked to Oliver Bernheim, the owner/CEO of Raymond Weil on monday, and he claimed, his main problem is movement supply. He said like he just received a delivery of 5000 pcs 7750s chronograph movements, which means, 3000 are too late and 1000 are to early. Sparepart timing is one of the most expensive features in his business.

BG
Thomas

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http://www.ellert.at

I really don't understand how Comco can be so restrictive of Swatch. I get the fact that they dominate the market, but that's not their fault - this is not a monopolistic situation, there just haven't been any competitors who have been able to supplant Swatch's place at the top of the heap. Companies like Sellita should be welcoming Swatch's decision as it will be great for their business.

If Comco is seriously concerned about supply then they aren't fully understanding where some of those ETA movements are going.

Totally agree with you Roff.

However, Comco is selectively restrictive. Unfortunately, they're not always so zealous.

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- This is Ghost Rider requesting a fly-by. - Negative Ghost Rider. The pattern is full.

It was not their fault to dominate the market? You have to remember, they bought nearly all available companies, who produce movements. Building up a new movement production on industrial basis (not 2000 movements a year, but 100.000s) is a very expensive and tough job. It is not only for perfecting the production, it is also a big problem to find or teach skilled industrial watchmakers, whithout whom nobody can produce working quality watches.
The swiss watch industry is offering top payments to attract new watchmakers. Specially interesting if You are living in the french Jura, and have Your expenses in Euro, but get paied in SFR!

BG
Thomas

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http://www.ellert.at

Oh sure they had a pretty aggressive acquisition strategy, but remember the history - this was Ebauches SA originally so that's the model. If the Swiss regulators saw fit to allow them to make the acquisitions in the first place then I don't see how they can complain about the market share after the acquisitions - seems to be a double standard.

I agree completely that series production in volume is a difficult step to take, although CNC machines make it easier as does the still fairly healthy parts supply business - hairsprings, screws, etc. The economic downturn certainly hurt some of those suppliers but the bounce back seems to be pretty strong from this distance - Thomas you are obviously closer to it.

The watchmaker shortage has been a problem for a while, but if Swatch are cutting back on production then that will presumably result in watchmakers moving away to people like Sellita et al.

It clearly is. I guess they allowed them to do so in a period of high unemployment, especially in the Neuchâtel-Bienne-Jura area. It arranged them that someone else took care of the problem and I guess they never expected what is actually known as Swatch to become so strong. Clearly, they underestimated N.G. Hayek.

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- This is Ghost Rider requesting a fly-by. - Negative Ghost Rider. The pattern is full.