Rolex fined by French competition authority
Published: Tuesday, Dec 19th 2023, 16:11
Updated At: Wednesday, Dec 20th 2023, 00:59
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The luxury watch manufacturer Rolex has received a fine of 91.6 million euros (around 87 million francs) from the French competition authority. This is because the Swiss company banned its distribution partners from selling watches online for over ten years.
The competition authorities have imposed the fine on Rolex France, Rolex Holding AG, the Hans Wilsdorf Foundation and Rolex AG, as the antitrust watchdogs announced in a communiqué on Tuesday. The fine is "linked to a communication and publication order".
The complaint to the competition authority was filed by the Association of Jewelry Watchmakers and the company Pellegrin & Fils. They are of the opinion that the provisions of the selective distribution agreement, which binds the distributors to Rolex France, constitute a vertical agreement that restricts competition. The authority rejected the argument of the French Rolex subsidiary, which justified the ban on online sales with the need to combat counterfeiting and parallel trade.
The competition watchdogs found that Rolex's main competitors allowed the online sale of their products under certain conditions, although they were exposed to the same risks. These objectives could be achieved by less restrictive means, the competition watchdogs stated.
Serious offense
The authority found Rolex's practices to be serious. They amounted to closing a sales channel to the detriment of consumers and retailers, while online sales of luxury goods, including watches, had grown significantly over the last 15 years.
For a long time, Rolex was one of the few manufacturers that did not have its own stores, unlike competitors such as Swatch or the watch brands of the Geneva-based company Richemont. However, the world's largest luxury watch manufacturer changed its strategy with the purchase of Lucerne-based watch and jewelry retailer Bucherer last summer. With Bucherer, Rolex also developed the online sale of certified pre-owned watches.
The French competition authority has also recognized this aspect: Rolex itself, together with one of its retailers, had developed a program for the online purchase of second-hand watches, the authenticity of which was guaranteed by the group. "An absolute ban on the online sale of its products cannot therefore be justified," explained the Competition Commission.
Vontobel analyst Jean-Philippe Bertschy does not believe that Rolex's business model will change as a result of the decision. The brand's position and value are so strong that demand will remain high in the coming years, he told the news agency AWP.
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