Thursday, September 17, 2009

SWATCH Group probed for ETA price increase

SWATCH Group is being probed for a price increase by ETA. ETA announced last year that there will be a price increase of between 5% to 12 % for the movements it manufactures. The Swiss cartel watchdog, COMCO is investigating if the price increase violates antitrust laws. This however is not the first time the SWATCH Group is being investigated.

In 2002, SWATCH decided to reduce the production of basic movements for third parties, which many smaller Swiss companies are dependent upon. SWATCH has initially decided to pull out of third-party production by 2006. After intervention by the authorities, SWATCH Group decided to continue to manufacture and supply the basic units up to 2008 and begin to reduce production after that.

SWATCH Group is confident of a good outcome for ETA. However SWATCH Group spokesperson said that the timing was bad as ETA faced recent massive cancellations of movement orders from third parties, without considerations to ETA and its operations. Observers have indicated that they understand that there are some concerns about the price hike, but they also appreciate that SWATCH is moving away from passively subsidizing the industry and they sympathize with the company.

Source: Watchtime, SWATCH, The Wall Street Journal

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