Watch repairers take antitrust fight against luxury-goods makers to EU’s top court

Watch Repair

3 January 2018. By Matthew Newman.

Independent watch repairers have taken their 13-year fight for access to spare parts from luxury watchmakers including Rolex, LVMH and Patek Philippe to the EU’s highest court.

The European Confederation of Watch and Clock Repairers' Associations, or CEAHR, has lodged an appeal against a recent decision by the EU's lower-tier General Court to reject its antitrust complaint, MLex has learned.

The Brussels-based group had looked to the General Court after the European Commission had dismissed its allegations that luxury watchmakers restricted supply of replacement parts and abused their market power.

Following this latest failure, it now wants the EU Court of Justice to oblige the EU antitrust regulator to probe its complaint again.

The case has attracted attention because it deals with similar issues to those in a long-running debate over luxury-goods makers restricting the sale of their products through "selective distribution systems."

The Court of Justice ruled on Dec. 6 that luxury-goods makers such as Coty can prohibit distributors from selling their products on Internet platforms such as Amazon.com and eBay. The court said that these restrictions were justified as long as they were used primarily “to preserve the luxury image” of the manufacturers’ goods and don't go "beyond what is necessary".

Complaint chronology

In the watch repairers' case, CEAHR argues that the manufacturers of “prestige” watches have preserved the after-sales service markets for themselves by thwarting independent repairers’ entry into those markets. The group has said that the luxury companies' refusal to supply parts is harming small repair workshops.

At issue is whether six luxury watchmakers — LVMH, Audemars Piguet, Patek Philippe, Rolex, Richemont International and Swatch Group — had abused their market power by refusing to supply watch repairers that weren't part of their authorized repair and maintenance networks. These networks require repairers to invest in machines, training and premises to obtain the companies' authorization.

CEAHR's initial complaint was filed in 2004 and rejected by the commission in 2008. But in 2010 the Luxembourg-based General Court annulled the decision, highlighting errors by the EU regulator including its definition of the relevant markets.

The commission was obliged to re-examine the complaint but rejected it again in 2014, saying there was a “limited likelihood" of finding an infringement.

The watch repairers appealed that second rejection, but the General Court ruled in October that the commission had this time been correct to reject CEAHR's complaint, saying the luxury manufacturers' concern for quality control justified maintaining closed networks of approved repairers.

In dismissing the appeal, the court agreed with the commission’s conclusion that it was likely that the luxury watchmakers were justified in refusing to supply spare parts to unauthorized repairers.

The watchmakers’ restrictions were allowable under EU antitrust rules, the court said, as long as their choice of repairers was made on "objective qualitative criteria applied in a non-discriminatory way."