Pascal Favre February 27 2014 Commission agrees with gradual reductions in delivery of mechanical watch parts Tavernier Tschanz | Competition & Antitrust - Switzerland Pascal Favre Competition & Antitrust On October 21 2013 the Federal Competition Commission closed its investigation (launched on June 6 2013) concerning the implementation of Swatch Group's new delivery policy (for further details please see "Commission considers reduction in delivery of mechanical watch parts").On July 8 2013 the commission decided not to approve the initial amicable agreement signed in Spring 2013 between its secretariat and Swatch Group concerning the gradual reduction of deliveries of mechanical movements and assortments (pieces that regulate the functions of mechanical watches), and returned it to the secretariat for renegotiation. In August 2013 a new amicable agreement was submitted to the commission.The new amicable agreement allows Swatch Group to gradually reduce its deliveries of mechanical movements. According to the secretariat's press release,(1) Swatch Group's obligation to deliver mechanical movements will remain valid until December 31 2019. Based on the quantities sold between 2009 and 2011, the commission ordered the Swatch Group and its subsidiary ETA SA Manufacture Horlogère Suisse to deliver:75% between 2014 and 2015;65% between 2016 and 2017; and55% between 2018 and 2019.Swatch Group and ETA have agreed to treat all clients equally. However, the agreement includes a provision in favour of small and medium-sized companies which allows for a departure from this rule, under certain conditions, in favour of specific clients. In the event of substantial changes in market conditions, the commission reserves the right to re-examine the terms of the obligation to deliver.As indicated on July 12 2013, the commission has accepted in principle that Swatch Group may also reduce its deliveries of assortments. However, the reduction would appear to be premature given current market conditions, as well as the uncertainty of any developments in that area. In this respect, the commission wishes to see developments during the upcoming years before consenting to reductions and, in particular, the completion of cases pending before the Federal Patent Court. Swatch Group remains free to initiate future negotiations with the commission's secretariat.For further information on this topic please contact Pascal Favre at Tavernier Tschanz by telephone (+41 22 704 3700), fax (+41 22 704 3777) or email ([email protected]). The Tavernier Tschanz website can be accessed at www.taverniertschanz.com.Endnotes(1) See www.weko.admin.ch/aktuell/00163/index.html?lang=fr.