ETA will continue to provide its movements to third parties in 2020

ETA, a Swatch Group subsidiary that produces watch mechanisms, will continue providing its movements to third-party customers in 2020. The Swiss Competition Commission (COMCO) has in fact extended the agreement with the Bienne giant - which was going to expire at the end of 2019 - by one more year, until the end of 2020.

ETA, a Swatch Group subsidiary that produces watch mechanisms, will continue providing its movements to third-party customers in 2020.

The Swiss Competition Commission (COMCO) has in fact extended the agreement with the Bienne giant - that was going to expire at the end of 2019 - by one more year, until the end of 2020. With this decision, the antitrust body overturned what was proposed by its secretariat, i.e. the ban on supplying to third parties starting from January, with the exception of small-medium sized companies.

According to the director of Comco, Patrik Ducrey, the final verdict on the subject is expected to be reached by next summer.

The beginning of this story dates back to a decade ago when the Swatch Group, which owns more than a dozen brands including Breguet, Omega and Longines, was obligated to supply components to competitors due to its dominant position. In 2013, the company reached an agreement with the regulator to gradually reduce sales to third parties.

In this timeframe, other watch movements players significantly increased their own production levels, even exceeding those of ETA, as in the case of Sellita. In 2019, Sellita produced and supplied one million mechanical movements (roughly twice as many as ETA), making it the new market leader in this sector. Accordingly, customers are no longer dependent on ETA.

Given the current situation, and considering that the market was expected to be fully liberalized for 2020, COMCO's decision was harshly criticized by the Swatch Group that announced: "With its decision, COMCO is interfering in economic policy and is restructuring the entire Swiss watchmaking industry. In doing so, it is exceeding and violating its authority. In view of the negative financial repercussions that these decisions will entail, Swatch Group reserves the right to claim damages. Swatch Group requests that the settlement reached in 2013 be terminated as planned on 31 December 2019".

With the end of the 2013 settlement, ETA would be free from supply obligations regaining the possibility to freely decide on its partnerships.