INDUSTRY NEWS : EU General Court rules on the supply of spare parts by Swiss watchmakers

The EU General Court has rejected the second appeal brought on by the Confédération Européenne des Associations d’horlogers-Réparateurs (the ‘CEAHR’) which challenged the European Commission’s decision in 2014 to close investigations into claims that watch groups such as Richemont, Swatch Group Inc, LVMH and Rolex were engaging in anti-competitive behaviour by stopping the supply of spare parts to independent watch repairers.

The CEAHR is a non-profit-making association consisting of nine national associations from eight Member States representing the interests of independent watch repairers.

This judgment means that the decision by the European Commission that found the servicing and repair market to be sufficiently competitive, and that requirements for third party operators to be authorised by the manufacturers, is lawful.

The CEAHR argued that the refusal by manufacturers to supply spare parts to independent repairers (i.e. the secondary market) constituted an “abuse of a dominant position”, but the EU General Court said there was not enough evidence to overturn the decision of the European Commission.

The ruling stated that there was not the elimination of effective competition, as competition still existed between authorised repairers. The refusal to supply spare parts was also deemed insufficient to establish this abuse of position and could be explained by the preservation of brand image and prevention of counterfeiting.

It has been 13 years since the CEAHR filed a complaint with the European Union’s competition watchdog in July 2004 against The Swatch Group SA, Richemont International SA, LVMH Moët Hennessy-Louis Vuitton SA, Rolex, SA, Manufacture des montres Rolex SA, Société anonyme de la Manufacture d’horlogerie Audemars Piguet & Cie and Patek Philippe SA Manufacture d’Horlogerie, alleging collusion and abuse of a dominant position to refuse to sell necessary spare parts to repairers who were not part of their approved repair and maintenance network and in so doing, potentially destroying their livelihood.

This complaint was rejected by the European Commission in 2008. They concluded that there was little likelihood of proving antitrust violations. The CEAHR appealed to the General Court. In December 2010 the General Court annulled the decision of the Commission to reject the complaint, stating that the Commission had not looked at the proper market because it failed to separate the luxury watch repair market from the market for the watches themselves, failing to take into consideration all the relevant matters of law and of fact.

As a result of the General Court’s ruling, in August 2011 the Commission announced that it would re-examine the CEAHR’s claims against the Swiss watch manufacturers. However, after three years, it ceased its enquiry, stating that there the prospect of finding antitrust violations were slim and that there was no new pertinent information obtained from the Richemont Group, Swatch Group and Rolex.

This lead to the latest appeal, for which the CEAHR further argued that the authorised provider programs are discriminatory because of the costs involved in terms of mandated training and equipment. In addition, CEAHR had objected to the commission’s finding that the practice was likely not the result of an agreement among the manufacturers, but rather a series of independent business decisions that were made over a period of several years.

The case is Confédération européenne des associations d’horlogers-réparateurs (CEAHR) v. European Commission, case number T712/14, in the European Union’s General Court, Second Chamber. To read the judgment, click on this link.



Categories: Industry news, Switzerland, Watch movements, watches, Watchmaking

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