Bloomberg News

Swiss Regulator Allows Swatch to Cut Component Deliveries

June 08, 2011

(Updates with share price in fifth paragraph.)

June 8 (Bloomberg) -- Swatch Group AG, the biggest maker of Swiss watch motors, will be allowed to start reducing deliveries to competing timepiece manufacturers next year as it seeks to end a regulatory requirement that it sell components to rivals.

Swatch, the Biel, Switzerland-based maker of the Omega and Breguet brands, will be permitted to scale back sales of mechanical movements to third parties to 85 percent of the level sold in 2010, the country’s competition regulator, Comco, said today in a statement.

The world’s biggest watchmaker has been required to supply movements to third parties because of its dominant position. Swatch’s ETA unit manufactures as many as 80 percent of the mechanisms made in Switzerland, according to a Sanford C. Bernstein estimate. Swatch has sought permission from Comco since 2009 to choose who it sells movements to.

The company has shown that it’s willing to accept a “gradual” solution, Comco said.

Swatch rose as much as 40 centimes, or 0.1 percent, to 403.60 Swiss francs and was trading at 403.50 francs as of 9:48 a.m. in Zurich.

Next year’s permitted reduction in motor deliveries forms a provisional measure while the regulator conducts an investigation into the matter, Comco said.

--Editors: Tom Lavell.

To contact the reporters on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net; Paul Jarvis in London at pjarvis@bloomberg.net.

To contact the editor responsible for this story: Paul Verschuur at pverschuur@bloomberg.net


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