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Why The Swatch Group Sued Tiffany & Co. And Won About $450 Million

Why The Swatch Group Sued Tiffany & Co. And Won About $450 Million Watch Industry News

You may have heard that the lawsuit between the Swatch Group and Tiffany & Co. is finally over. The relationship that began in 2007 (which was meant to last for at least 20 years) ended bitterly in 2011. The “strategic alliance” was to have Tiffany & Co. partner with the Swatch Group to produce Tiffany & Co. branded timepieces. Tiffany & Co. made watches before this but wanted someone to take over that part of their business (and ideally to grow it).

The first Swatch Group Tiffany & Co. watches were released in 2009 and I believe the last year they showed any new watches at Baselworld was in 2010. In 2011 the Swatch Group announced that it was going to pull out of the deal and sued Tiffany & Co., and Tiffany & Co. counter-sued. The amounts in questions were in the billions of dollars.

So what happened? Why did a relationship that was supposed to result in one of the most important watchmakers in the world according the Swatch Group go so sour, so fast? The legal proceedings between the two parties were more or less secret being done via an arbitration court in the Netherlands. It turns out that the Swatch Group won the argument, resulting in an award of 402 million Swiss Francs in damages while Tiffany & Co.’s counter-claims were dismissed. Why did that happen and how did the dispute get to that point?

In an article in Forbes I attempt to provide the history of the relationship between the Swatch Group and Tiffany & Co. and explain what I feel may have really happened…

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  • Kar Wai Law

    The forced diplomacy and painful restrain is strong in this one..article..

  • Kris C

    Meh, I see it as nothing of value was lost – I guess I understand the position of T&co not wanting to promote the watches, because every one that I’ve seen, in both this article and in the Forbes article, are contrived, boring, and sometimes ugly. 

    Remove the T&co brand from the dial of the one shown in this article,then engrave BVLGARI a few times on the bezel and it would fool anyone.

  • Bucky Katt

    That’s funny, I’m wearing a Tiffany watch *right now* (spooky!).  It’s from the Tiffany Mark line, and it’s classic, understated, simple, clean, etc.  By contrast, the Tiffany Swatches are, let’s be honest here–garbage.  The watch you used as a sample in this article is typical.  It looks like something you’d get at a mall kiosk for $20, not a Tiffany item. So I’m glad the “partnership” is over.

  • beachdonnie

    Let’s be serious … $450 million is a lot of money but it’s not going to drive Tiffany & Co out of business.  Not even remotely close.  We’re talking about a company with annual revenues of $4 billion not to mention a market cap in excess of $11 billion.  So, the damages awarded Swatch Group appear to be in the range of one year’s watch revenue for Tiffany & Co plus probably other related costs.  In-fact their stock price is up over 10% in the past month alone.  So, it doesn’t appear they’ve incurred much of a hit if any from this litigation.  Firms get sued all the time.  For all I know their reserves already take into account pot’l exposure resulting from this litigation?  One thing’s for sure, Tiffany & Co has tradition of a great brand with equally great products.

  • LapYoda

    Huh.  When I saw the Tiffany line of men’s watches, I thought Edox, not Tiffany.  While I think the women’s pieces are more attractive, they still range from underwhelming (in design and movements) to downright crass.  While Swatch may have won this round legally, perhaps if Tiffany relaunches its watch collection with something more deserving of the name and reputation, they could be the winners in the long term.

  • DG Cayse

    Maybe this piece will smoke out what really went down?

  • Ulysses31

    Swatch is a corporate giant, and like a giant its head is so far from its feet it can’t tell where it’s going.  I often get the impression that Swatch group is the type of conglomerate that throws everything at the wall and sees what sticks; you can do that when you’re massively wealthy and you can take significant losses with a shrug, but it also means you don’t have to be good at anything in particular, because you can spend yourself out of trouble.  The designs they came up with for Tiffany were atrocious, looking more like the chintzy crap you’d find for a few dollars in a gas station or a supermarket.  Tiffany & Co were obviously upset that Swatch had taken a big dump on their brand and wanted nothing to do with it.  The talent of Swatch group is in the dedicated and inventive smaller brands it has consumed over the years.

  • Waltermaximus

    Excellent article Ariel

  • nateb123

    Kar Wai LawThese are two of top of the list for organizations you least want to offend as a watch journalist. Thankfully we have no such issues.
    It is staggering how ugly these watches were.  Despite losing the lawsuit, Tiffany & Co come off as victims in this just because of the awfulness of Swatch’s designs.  I could do better preliminary designs for an entire lineup in a couple of evenings.

  • Dan Finch

    This is the weirdest thing, hard to see what the problem was, but looks like Tiffany was to blame here. The plan to use Swatch’s distribution should have really boosted Tiffany’s volumes. Now the only place you can buy is from Tiffany meaning no competition and no discounts! Tiffany has aways partnered in the past with other watchmakers. Sometimes they even had their name printed on other brand’s off the shelf models, which really is a lame and outdated marketing strategy! I don’t think Tiffany’s watches ever looked better than with Swatch’s Atlas Dome series and their women’s cocktail watches. To me, they brought the Atlas line up to date and captured the essence of the brand as “The American Cartier.” Now they seem to have taken a puzzling new direction directing it all themselves using subcontractors. Tiffany must have determined that they have more appeal with watch collectors of their vintage models. But going retro with overpriced Sellita’s? They are going to need more exclusive movements to command those kind of prices…

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