Nov 25, 2008
Swiss probe possible market abuse at Swatch unit
Nov 25, 2008
ZURICH, Nov 25 (Reuters) - Swiss competition authorities have opened a preliminary investigation into possible market abuse by Swatch's ETA unit, which makes watch components.
The Competition Commission said on Tuesday ETA had recently communicated price rises and changes to conditions of payment to its customers for 2009 which had generated several complaints. "The aim of the preliminary enquiry is to determine if ETA benefits from a dominant position in the watch movements market and if, in the framework of setting prices and conditions, there is any indication of abuse of this position," the Competition Commission said in a statement.
By 1100 GMT Swatch shares, which have lost some 60 percent of their value so far this year, had fallen 0.9 percent to 137.50 francs, while shares in Swiss rival Richemont were trading over 2 percent higher at 19.69 francs.
"We are treating the investigation seriously. The Competition Commission is welcome at ETA and Swatch Group and we will show them why we had to increase prices for both internal and external clients," said Swatch Group spokeswoman Beatrice Howald.
Howald said the price increases were justified as general and material costs have risen.
"We've seen record years in the watch industry, partly thanks to ETA, which has invested over 100 million Swiss francs ($83.3 million) in production in the last three to five years and other watchmakers have benefitted from this," she said.
The Swiss watch industry is bracing itself for weaker demand as customers cut back on spending, scared by signs the financial crisis is spilling over to the wider economy. (Reporting by Sam Cage and Katie Reid; Editing by John Stonestreet and David Holmes)
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