The ETA supply dispute

In the crisis years the Swatch Group’s predecessors folded the ébauche factories of Ebauches SA into one company, ETA of Grenchen: A. Schild merged into it in 1978, it took over the management of Ebauches SA in 1982 and the Fontainemelon works in 1984, and ETA says it became a single company in 1985.^6, 7, 8

Much of the industry came to depend on it. swissinfo reports that in 2004 the Competition Commission found ETA dominant in movement blanks up to 300 francs, with no alternative supplier, and Donzé estimates that the group made 80 per cent of Swiss movement blanks.^9, 10

One of ETA’s customers was Sellita, founded at La Chaux-de-Fonds in 1950, which assembled and adjusted ETA’s ébauches for other brands; Europa Star reports in 2010 that about 30 per cent of the ébauches ETA sold outside the group passed through Sellita.^{11, 12, 13}

The business historian Pierre-Yves Donzé argues that for some twenty years the group’s hold on movements mattered little, until it moved into luxury and finished watches in the early 2000s, after the luxury-group consolidation, and its customers became its rivals.^10, 14

In July 2002 ETA told its customers, Sellita among them, that it would cut its deliveries of ébauches from 1 January 2003 and end them from 1 January 2006, selling assembled movements instead. Nicolas G. Hayek said ETA was overwhelmed by orders, which JCK reported as five times higher than a few years before, and that its ébauches were turning up in fake watches.^1, 9, 15

Sellita went to the Competition Commission on 30 August 2002. The commission opened an investigation on 4 November and on 18 November approved ETA’s undertaking to keep supplying its customers while the case ran. When Sellita complained in December of price rises of up to 25 per cent and asked for interim measures, the commission refused them on 17 February 2003 as a dispute between two firms and charged Sellita the costs; on 19 December 2003 the Federal Supreme Court upheld the charge, holding that by asking for a formal ruling Sellita had become a party.¹

The commission’s own account dates the end of that case to 2004: an amicable settlement in which ETA undertook to keep delivering ébauches to its customers until the end of 2010. swissinfo and JCK reported it in November 2004 as full deliveries until 2008, falling to 2010; the decision was printed in 2005, which is why some accounts give that year.^2, 9, 15

The quarrel came back. The commission opened an investigation of ETA’s price rises for 2009 on 14 September 2009; swissinfo reports that Hayek announced that year that the group would stop delivering parts, and Europa Star dates his statement to 18 December. On 6 June 2011 the commission opened an investigation into the Swatch Group’s planned stop of all deliveries of mechanical movements and assortments, the regulating parts, and agreed interim terms: in 2012 at least 85 per cent of the 2010 quantities of movements and 95 per cent of assortments.^{2, 13, 14, 16}

On 8 July 2013 the commission refused a settlement signed that spring, which would have reduced movements and assortments until 2021 and 2025, finding a cut in assortments premature. On 21 October 2013 it approved another: ETA would supply its existing customers with mechanical movements until 31 December 2019, at 75 per cent of their average deliveries of 2009 to 2011 in 2014 and 2015, 65 per cent in 2016 and 2017 and 55 per cent in 2018 and 2019, treating all alike, with further quantities for small and medium firms alone; the duty to supply assortments stayed.^3, 17

The end was drawn out. In October 2016 the commission refused the group’s request to change the settlement; it reopened the case in November 2018, imposed interim measures on 16 December 2019 that suspended ETA’s mechanical deliveries to existing customers from 1 January 2020, small and medium firms excepted, and on 15 July 2020 imposed no new obligation.^{4, 5, 18, 19}

Sellita grew from assembler to maker. It made its own versions of ETA calibres whose patents had expired, such as the SW200 matching ETA’s 2824; Europa Star reports 1.4 million movements in 2013, 800,000 of them its own calibres and 600,000 ETA calibres it assembled, and notes that it still relied on the Swatch Group for escapements.^{11, 12, 20}

Others set out to supply the trade. Europa Star reports that the Festina group bought Soprod in 2008, whose A10 was built as an alternative to ETA’s 2892 and which made just over 100,000 movements in 2013 with escapements from its sister firms; that Concepto of La Chaux-de-Fonds set out to offer escapements outside the Swatch Group; and that Chopard founded Fleurier Ebauches in July 2008.^13, 20

Groups abroad bought Swiss movement works. Europa Star reports that Citizen bought La Joux-Perret in 2012 mainly for its mechanical movements and to secure movements for Bulova after ETA moved to restrict its sales.^21, 22

Brands built their own. The commission found in 2020 that some of ETA’s customers had built up or enlarged their own production; Tudor says it has made its own movements since 2015, through Kenissi, founded in 2016. A movement from a firm’s own works became, in Donzé’s account, a mark of standing, part of the mechanical revival.^{5, 10, 23, 24}

Movements from Asia filled the lower end. Monochrome describes the movements of Sea-Gull of Tianjin, Seiko and Citizen’s Miyota as cheaper, readily available alternatives that smaller brands turned to as ETA reduced its supply.²⁵

The commission’s decision of 2020 rested on a survey of about 200 watch and movement makers. It found that ETA’s customers had widened their sources, that Sellita offered comparable alternatives to several of ETA’s best-selling calibres and that demand for Swiss-made mechanical movements had fallen; but ETA, selling most of its output inside the group, stayed dominant through its volumes and capacity, and could not, for instance, tie its movements to the regulating parts of its sister firm Nivarox-FAR.^4, 5, 26

Who led the market by 2019 depends on who is counting. The Swatch Group said that Sellita produced and supplied one million mechanical movements in 2019, roughly twice as many as ETA; the commission found in 2020 that ETA was still by far the most important maker of Swiss-made mechanical movements.^26, 27

swissinfo reports the commission’s president saying that alternative suppliers had effectively won ground, and experts’ concern that ETA, now free, could win customers back as the pandemic left the industry with spare capacity.²⁸

Monochrome reports 1.5 million movements from Sellita in 2022, from 850 employees, with its own blank factory at Glashütte; Citizen says its La Joux-Perret supplies brands inside and outside its group. Where the movements now come from is told under Making watches today.^12, 29