Last week, Switzerland's Federal Competition Commission (or COMCO, for short) announced that it had rejected an agreement struck between its Secretariat and the Swatch Group this past spring to reduce deliveries of components to rival watchmakers. The Swatch Group, which has been the supplier of various watch components for most of the Swiss watch industry for over 20 years (including its direct competitors, as well as big luxury brands, like Cartier and LVMH Moët Hennessy Louis Vuitton's Tag Heuer), expressed its intent to reduce deliveries of various watch mechanisms to its rival watchmakers in 2011. The Swatch Group, which owns Harry Winston and Omega, as well as the license for Balmain's watches and Tiffany's (until the parties had a falling out), asked COMCO for permission to decrease the number of movements and other parts it sells to competitors, which caused a flurry of lawsuits and fears that independent watchmakers would be put out of business.
COMCO launched a probe in June 2011 into whether cutting off the supply to third parties would constitute an abuse of Swatch Group’s dominant position in the market, in violation of competition law. At the time, Nick Hayek, Swatch's chief executive said: "We are in a ridiculous situation that would be like having BMW supply all the engines for Audi and Mercedes." Small temporary reductions were announced in late 2011, while COMCO launched an investigation. Last week, COMCO said it agreed in principle that Swatch Group should be able to reduce the delivery of mechanical movements, but held that the company must do so in a gradual way and under certain conditions. COMCO further approved a further 10 percent reduction for 2014.