Ban on Swatch Group selling ETA movements comes a step closer: (Weka) announced that it is preparing to ban sales to third parties in 2020

roadwarrior

Grand Tyme Master
Founding Member
Joined
Jul 17, 2014
Messages
64,645
Saga dates back to 2002, when Swatch Group first threatened to stop selling ebauches to third parties

Qf9qlKQvaxFqwAAAABJRU5ErkJggg==
WatchPro-Logo.png

NEWS by ROB CORDER on DECEMBER 16, 2019

https://usa.watchpro.com/ban-on-swat...a-step-closer/

Last week the Swiss Competition Commission (Weka) announced that it is preparing to ban Swatch Group from selling ETA movements to third parties in 2020.

This is just the latest turn in a saga that dates back to 2002, when Swatch Group first threatened to stop selling ebauches to third parties, says Tony Traina, a lawyer and writer at Rescapement, a new publication and newsletter about the watch industry.

Back then, Swatch Group thought it untenable that it was supplying movement components to brands that competed with some of Swatch’s own brands like Omega, Tissot and Hamilton.

The dispute dragged on for years, when, in 2013 the parties finally reached an agreement whereby Swatch could gradually decrease the number of ETA movements it sold to third parties through 2019. Then, in 2020, Swatch Group would be free to sell (or not sell) its movements to whomever it pleased.

Well, it seems things haven’t gone quite according to plan. See, both Swatch and its competitors were supposed to benefit from that 2013 deal: come 2020, Swatch would finally be able to operate freely in the market again without having to manufacture a government-directed number of movements for other watch brands. Meanwhile, Weka thought that gradually reducing ETA’s dominance in the movement market would allow competitors to come in and create a more competitive landscape.

According to reports though, Weka commissioned a study of the market landscape last year to see if the plan had worked. While not public (yet), it seems as though the findings of this report are what prompted Weka’s ETA ban. In other words, ETA’s position is still likely too dominant and Weka feels there’s not enough competition in the supply of Swiss movements. Hence the 2020 ban.

This is a complex situation: there are many moving pieces and the results of the forthcoming ban will be felt across the watch industry for years to come, not to mention the domestic Swiss politics and economic considerations at play. It sounds as though Weka is prioritizing the long-term health of the movement supply business over its short-term prospects.

With ETA blocked from supplying movements in 2020, the supply crunch that have left brands like Ming scrambling and unable to meet customer demand is likely to continue. But, the long-term hope is that movement suppliers like Sellita and Soprod will fill the vacuum left by ETA’s absence.

To be sure, smaller brands like Ming with less resources stand to lose the most in the meantime. Larger brands that have relied on ETA movements may fair better by continuing to shift to their own in-house production or finding partnerships to build the economies of scale still needed to manufacture low-cost mechanical movements at scale — Tudor and Breitling stand as examples here.

Add to that factors outside of Switzerland’s control, and it becomes clear how the decision could impact the watch industry as a whole. For example, as I commonly cover in monthly reports on Swiss export numbers, the low end of the watch market (often powered by movements from ETA) continues to decline as customers flock to smart watches. Meanwhile, Seiko’s Miyota continues to produce cheaper mechanical movements that are increasingly recognized and respected among consumers, even though they lack the vaunted “Swiss Made” labelling.

This is also emblematic of a larger issue in our modern economy: in many industries, power is concentrated with a few monopolistic companies. There are many causes, but technology is one of the most important. Large companies build the technology platforms, then smaller ones leverage these platforms to carve out niches of whatever’s left.

For example, a generation prior, it would have been difficult for a company like Ming, with a shoestring budget and no manufacturing capability to gain an international following and win a prestigious award after just a few years in business. But, combine a cool design, some social media marketing, and watch forum momentum, and the result is a brand selling out its latest model in two minutes. And this isn’t to knock Ming — I love their watches and the 17.06 Slate is one of the best looking yet.

But, let’s not forget that the escapement ticking inside that is built by a monopolistic Swiss conglomerate with designs on pulling the rug out from under companies like Ming.

Likewise, this isn’t to knock Swatch. They’ve dedicated years of research and development, as well as the capital to manufacture these movements, and are now being “forced” to sell them to competitors. Oh by the way, Swatch subsidiary Nivarox is required to continue supplying its mainsprings (i.e. the escapement components) to third parties until 2023, and it’s got an even bigger monopoly there then it does on the fully-assembled ETA movements causing the current kerfuffle.



About the author: Tony Traina is a writer at Rescapement, a publication and newsletter dedicated to the watch industry.
 
When their inventory backed up they opened the floodgates. Next time the third party buyers should let ETA eat the movements. Probably one more reason Elshan from Zelos is moving back again to Miyota 9015 movements.
 
An interesting read indeed! Reminds me of what a ships Steward said to a passenger, aboard the Titanic. "God himself can't sink this ship"! Thanks Mike.:hat:
 
Does anyone here have a Ronda R150? I’m curious as to the overall quality accuracy etc. I’ll grab a watch with this movements as soon as I see it in something other than the “I” brand.

https://watch-movements.eu/blog/en/2018/04/15/the-ronda-r150-under-the-loupe/

There is a lot of space between the movement and the edge of the housing. Relatively small movements in large cases inevitably lead to the fact that the date is not near the edge of the dial, but relatively far inside. Here, however, the manufacturer of the watch has managed it quite well by optically positioning the date on a circle located further inside.

Ronda_R150_02.jpg
Ronda_R150_01.jpg


You can see immediately that there is no decoration on the movement, like perlage or geneva stripes. The engraving “TWENTY-FIVE 25 JEWELS …” on the rotor looks rather rough and the laser markings next to the balance are barely legible. Not a beauty, but pure technology instead.

Ronda_R150_03.jpg


The ball-bearing rotor is held by three small screws. Underneath you can see a rather small automatic bridge, which looks almost like a banana. As with many more modern movements, such as the Miyota 9015, the automatic unit is integrated into the main plate, and not an extra modul such as in the ETA 2824-2.

On the top side of the automatic bridge is a drive wheel (gold colored), which is directly driven by the gear rim of the rotor. It is only plugged in there and is held in place by the inner ring of the rotor. So be careful that this part does not suddenly disappear when the rotor is removed!

Under the automatic bridge it looks like this:

Ronda_R150_04.jpg
[h=3]On the timing machine[/h]
So much for the theory, but how well does the movement work in practice? There is of course no long-term experience yet, since the movement is still very new.

On the timing machine, the values are very stable in all positions, but they vary considerably depending on the position. In my tests, the maximum deviation between the positions was 20 seconds per day. This is within the specification of the manufacturer (maximum 30 s/d).
The average rate over all six positions is about +8.5 seconds per day. Not record-breaking, but fine.
Ronda_R150_15_ZBO.jpg
The R150 on the timing machine, dial up
The amplitude was between 290 ° in the horizontal positions (dial up and dial down) and about 270 ° in the hanging positions (crown left, right, up, down). And the beat error was between 0.0 and 0.1 ms in all positions. So there is nothing to moan about.
Ronda_R150_15_KU.jpg
The R150 on the timing machine, crown down[h=3]Conclusion[/h]
The R150 is certainly an important building block for Ronda to re-enter the market for mechanical watch movements. Technically, it offers solid home made work without special refinements. One or the other production step may need to be optimized a bit. For example, I found some oil splashes on and around the pallet fork, as well as a blob of oil around the setting lever push button.

Ronda_R150_07a.jpg


A watch movement that could be well received by smaller watch manufacturers in particular, if they are looking for a Swiss Made movement. And if Ronda manages to produce large enough quantities of good quality at a good price. The movement is not fully compatible with the ETA 2824-2 due to the slightly different height. Therefore watch cases possibly have to be adapted a little bit. But it should be possible to create watch cases that fit both the Ronda R150 and the ETA 2824-2. Time will tell if Ronda will succeed with the R150.
 
https://watchesbysjx.com/2019/12/eta...YKQi6h2OAv15ck


Breaking News: ETA Movement Sales Halted by Swiss Authorities

Starting January 1, 2020.

Omega-Speedmaster-Dark-Side-of-the-Moon-Apollo-8-6.jpg


News last weekend that Switzerland’s competition regulator, COMCO, also widely known by its German acronym Weko, was weighing a ban on ETA movement sales to third-party brandscaused a major stir in the watch industry – and a terse, lengthy response from Swatch Group, ETA’s parent and Switzerland’s biggest watchmaking conglomerate.

The move was ostensibly to allow alternatives to ETA – once Switzerland’s dominant supplier of mechanical movements – to develop. According to the Swatch Group, the ban was entirely without merit, especially given the fact that ETA was no longer the biggest supplier of movements to the industry. That title now belongs to Sellita, which supplied a million movements in 2019, compared to half the number for ETA.

Now COMCO has formalised the year-long ban in an announcement that puts in place a “temporary suspension of the supply of [ETA] mechanical movements to customers”. The ban will be in force until COMCO makes its final decision by the summer of 2020.

The ban, however, allows ETA to sell its movements to small- and medium-sized watch brands, which are defined as having less than 250 employees, which will probably be of little consolation to ETA. According to a Swatch Group spokesman quoted by Reuters, the majority of ETA’s movement sales are to companies with more than 250 employees, and as a result, ETA foresees it won’t be able to sell any movements next year.

According to the statement, the ban is founded on COMCO’s belief that if ETA was allowed to continue selling movements for one more year, it would have a negative impact on competition within the movement manufacturing industry. At the same time, brand using ETA movements would have had the ample time to diversify their movement supplies since ETA announced its decision to gradually halt movement sales to third parties over a decade ago.

COMCO director Patrick Ducrey, in a comment to Reuters, expressed scepticism that the ban would result in a movement shortage. “Is there really going to be a shortage of watch movements? I’m not sure. There’s also a grey market and brands have built inventories.”

The ban is the latest, and most drastic, development in a years-long dispute between Swatch Group and COMCO that began in 2002, when the movement maker announced it wanted to stop selling movement blanks to brands not part of Swatch Group, which owns marques like Omega, Longines and Tissot.

In an ironic twist, the ban reverses the starting positions of the two adversaries, with Swatch Group now wanting to continue the still-lucrative business of being a major movement supplier, and COMCO wanting it halted in totality.

Sources: Neue Zürcher Zeitung (NZZ) and Reuters
Update December 19, 2019: Article updated to note that ETA is only allowed to sell movements to small- and medium-sized brands, which is a de facto ban on sales.
 
Back
Top Bottom