Cartel Investigation
In 2003 the Swiss Competition Commission launched an investigation into the business practices of ETA SA after Nicholas Hayek, then chairman of ETA parent The Swatch Group Ltd., announced in 2002 that ETA would shortly stop supplying ébauches (partial watch movements) to companies outside The Swatch Group. Competitors complained that this would effectively put them out of business. Hayek countered that Swiss watch making companies must begin to invest in their own movement-making capabilities because it was detrimental to the long term health of the Swiss watchmaking industry to rely on one supplier, ETA, for the bulk of ébauche and parts production. The Swiss Competition Commission ordered ETA to continue supplying ébauches to companies outside The Swatch Group during the investigation.
In 2005 the Swiss Competition Commission concluded its investigation and ordered ETA to continue delivering ébauches and parts at the then current levels until 2008, after which ETA was allowed to gradually reduce deliveries until 2010. The Commission had found that for ébauches in the price range up to US$256, there we no real alternatives and ETA's decision to stop deliveries was a breach of Swiss law pertaining to cartels.
Although the 2005 decision has spurred some watchmakers to invest in the personnel and equipment necessary to produce movements in-house, heavy reliance on ETA continues to the present day. The original finding has been extended, with the Swiss Competition Commission ordering in July 2012 that based on 2010 supply levels, ETA may reduce the level of supplied movements by 30 percent in 2014-2015, 50 percent in 2016-2017 and by 70 percent by 2018-2019. The number of Nivarox products that must be offered will be reduced gradually, dropping by 70 percent by the year 2023. ETA hopes to eventually reach a market position where they are allowed to freely choose to supply or not to supply parts and ébauches to competitors based solely on ETA's discretion.
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