Time ticking away for Swiss as Monti launches watches probe

Date: 30/01/03

By Peter Chapman

MARIO Monti's competition department is probing allegations that luxury Swiss watchmakers such as Rolex and Tag Heuer are forcing small independent watch repairers out of business.

The disgruntled repairers say they are being prevented from buying spare parts, ranging from tiny springs to entire movements, because the major watchmakers supply only their own tightly-controlled dealerships.

"The Commission is currently examining if the refusal of a maker of watches to supply parts to independent expert watchmakers could constitute a violation of Community law," Monti confirmed in response to a question on the issue by French MEP Dominique Vlasto.

Vlasto, whose constituency includes the rich French Côte d'Azur region, said skilled local horlogers - many of whom had spent years as apprentices - were pleading for help from Brussels. She said big manufacturers are increasingly turning the screw on small businesses in the EU.

Monti has asked his officials to check whether the watchmakers are guilty of deliberately abusing their dominant position in the after-sales market. If evidence is found of this, the watchmakers could face fines of up to 10 of their global sales.

Commission sources say the investigation is initially likely to focus on whether individual manufacturers with a share of less than 30 of the market should be allowed to benefit from a special 'block exemption' for distribution agreements. On the face of it, Swiss watchmakers will be protected by this clause.

However, Monti fears that if all major brands are channelling business through their own dealerships, the let-out could have damaging "cumulative effects" on independents.

This might put the exemption into question.

Jean-Daniel Pasche, the president of the Federation of the Swiss Watch Industry, whose members' global sales topped €6.5 billion last year, said watchmakers were entitled to pick and choose who supplies and repairs their watches to protect their brands.

"The main goal is to ensure the quality of the services so it is of benefit to the consumer," he said."

And Rolex spokeswoman Dominique Tadion said: "We are well aware of the European Commission's request. This matter is presently being handled by our lawyers."

Competition Commissioner Mario Monti's department is probing allegations that luxury Swiss watchmakers such as Rolex and Tag Heuer are forcing small independent watch repairers out of business.