Swatch Group tried to starve rivals of movements — the regulator made it pay for 17 years

Any company that becomes a critical supplier to its industry — whether it makes watch movements, smartphone chips, or cloud infrastructure — should assume that abandoning the market is not a strategic option.

ETA SA, a subsidiary of the Swatch Group, was by far the largest manufacturer of Swiss watch movements — producing about 70% of all Swiss ébauches (unfinished movements) used by the industry. In 2002, Nicolas Hayek announced that ETA would stop supplying movements to companies outside the Swatch Group, arguing that Swiss watchmakers needed to invest in their own movement-making capabilities rather than depending on a single supplier.

Competitors complained immediately — most Swiss watch brands had no in-house movement production and would have to shut down without ETA. COMCO, the Swiss competition regulator, launched an investigation in 2003. In 2005 it ruled that ETA's decision was a breach of Swiss cartel law and ordered the company to continue supplying at current levels until 2008, then gradually reduce deliveries through 2010.

In July 2012, COMCO extended the timeline again because independent watchmakers had still not developed alternatives. The new ruling allowed phased reductions: 30% by 2014–2015, 50% by 2016–2017, and 70% by 2018–2019. Nivarox (balance springs) would continue at reduced levels through 2023. Swatch Group spent 17 years trying to cut off competitors but was forced by regulators to keep supplying them.

COMCO forced ETA to keep supplying competitors for 17 years, phasing reductions by 30%, 50%, and 70%, because its dominance made refusal an abuse of law.

Swatch Group underestimated the industry's dependence on ETA — it was the only supplier of many movement types, so cutting supply would have destroyed hundreds of brands regulators could not allow.

COMCO ruled that ETA held a dominant position in the market for ébauches priced up to US$250, meaning its refusal to supply was an abuse of that dominance under Swiss competition law.

Swatch Group's strategy assumed it could unilaterally restructure the industry's supply chain, but competition law exists precisely to prevent dominant suppliers from doing that.

A dominant supplier cannot simply cut off competitors and remake the industry — competition law exists to prevent exactly that. The more indispensable your product, the less control you have.

COMCO's 2005 ruling gave the industry time to develop alternatives. Sellita and other movement makers grew as alternative suppliers. Swatch Group's forced supply phase-out achieved Hayek's goal of a stronger industry, but on the regulator's timeline.