By John Revill
ZURICH--Swiss competition authorities have put back to next year
the publication of a report which will allow Swatch Group AG
(UHR.VX) to reduce its supply of key components to other watch
makers.
The authority's recommendations, which were originally planned
to be released this year, are now under consultation with other
watch makers, said Vice Director Patrik Ducrey.
Because Swatch Group, the world's largest watch maker, has a
dominant market position, supplying up to 80% of the Swiss watch
industry's movements--the internal mechanism of a watch--it cannot
unilaterally halt the supply without infringing the Swiss Cartel
Act.
The dominance is a legacy of Swatch's history of the time it
helped to restructure the domestic watch industry.
Last year the Biel-based company asked the Swiss competition
authorities to look into the situation with the aim of being
allowed to reduce its supply, because it wants to keep more of its
production for its own watches and had grown tired of other
companies spending money on marketing rather than
manufacturing.
Among the customers for Swatch's components are Swiss-based
luxury group Compagnie Financiere Richemont SA (CFR.VX) and French
group LVMH Moet Hennessey Louis Vuitton (MC.FR), which owns several
Swiss watchmakers, as well as smaller, independent watch
makers.
Provisional measures which allow Swatch Group to reduce the
supply up to 85% of watch movements and 95% of other components at
their 2010 levels during 2012, had already been previously extended
into 2013 by the commission.
The delay to the report wasn't unexpected, said analysts.
"With the extension of the measures into 2013 there was no
urgency anymore," said Rene Weber at Bank Vontobel.
Under draft proposals, Swatch Group will be able to reduce the
supply of movements to watch makers to 50% of their 2010 levels by
2016, 30% by 2018 and zero by 2020.
Supply of assortments--components such escape wheels produced by
Swatch's Nivarox division--could be reduced from to 80% of their
2010 levels by 2016 and 50% by 2020, according to the draft
proposals.
Mr. Weber said the extension of the report could mean this
further reduction in parts supply would occur more slowly.
A spokeswoman for Swatch Group declined to comment on the delays
to the competition commission's recommendations.
"Nothing has changed. It is business as usual," she said.
Write to John Revill at john.revill@dowjones.com
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