Interesting article in the Sydney Morning Herald - Sydney Australia
Swatch is ripping you off: ex-boss
MICHAEL BACHELARD
November 8, 2009
PEOPLE who pay $4000 for an Omega watch may be paying an inflated price that has been illegally set to maintain the brand's exclusivity, according to the man who used to run the company.
Mark Watson, who until November last year was general manager of the Australian branch of Swatch Group, has accused his former company of price fixing.
Mr Watson was marched out of the company's Glen Iris head office last November because, he says, he refused to break the law by forcing retailers to charge the company's preferred retail price and not to offer discounts.
He is now suing his former employer, the world's largest watchmaker, in the County Court for loss and damages.
Retailers have claimed to The Sunday Age that the Swatch Group's practice of retail price maintenance is alive and well. One said his business was currently being punished with higher wholesale prices because he had discounted their products.
Swatch brands also include Breguet, Tiffany & Co, Longines, Rado and Tissot.
Mr Watson told The Sunday Age that the international bosses of the Swiss watch leader consistently demanded that he stop retailers from discounting the company's brands.
If a retailer did offer a lower price, Mr Watson was told to stop distributing stock to them, or to charge them a higher wholesale price, so their margin was crimped and they were unable to discount.
The Trade Practices Act prevents such activity, because "fixing, controlling or maintaining" prices constitutes a "substantial lessening of competition".
Sydney lawyers Piggott Stinson confirm that "resellers are entitled to advertise and sell products at whatever price they see fit regardless of any benefit or threat by the supplier".
But Mr Watson said that when he had pointed this out to his Swiss boss Yann Gamard, he had thumped the table and shouted "the law in Australia is stupid".
Mr Watson was eventually sacked because, despite his business success with the company, he came to be seen as a troublesome employee.
"They like to have puppet-like figures around the world," Mr Watson said.
Swatch Group Australia spokeswoman Renee King said: "I've just been told to make no comment."
The company is fighting Mr Watson's claim.
Mr Watson said Swatch had wanted to maintain high retail price tags, particularly on premium brands such as Omega, to maintain their reputation for exclusivity.
"They've got the best range in the world, no question, but their corporate position is one of being above the law, and being wealthy enough to have this very arrogant attitude towards things and people that get in their way," Mr Watson said.
European Union documents show Swatch has had similar problems in the past.
In 2005, the Danish branch of the company, and its chief executive, were fined almost $A50,000 between them for entering agreements with retailers obliging them to sell for the company's preferred retail price, without discounts. This breached Danish competition law.
Mr Watson's case is due to go to a hearing late this month.
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