Swatch Group announced Sept. 12 that it terminated its cooperation contracts with Tiffany & Co.
The company released a statement saying the action is because of Tiffany & Co.’s “systematic efforts to block and delay development of the business.”
In 2008, Swatch Group founded Tiffany Watch Co. Ltd, under a partnership deal with Tiffany, which was responsible for the development, production, and distribution of Tiffany & Co. branded watches. Sales were handled through points of sale operated by Tiffany & Co., Swatch Group, and independent retailers. According to a news report, the deal aimed for $500 million in sales in the medium-term.
Swatch Group said in its statement that Tiffany Watch will be permitted to wind down current business over the next two years.
Swatch Group and Tiffany Watch will also press claims for damages against Tiffany & Co. in compensation for the loss of planned long-term future business.
Tiffany and Co. issued the following statement in response:
Since Tiffany & Co. and The Swatch Group Ltd. entered upon this venture more than three years ago it has become increasingly clear that Swatch is unwilling to honor the terms of our agreement, make the necessary commitments, and work cooperatively to develop the business for Tiffany & Co. watches in the luxury space. Despite assurances to the contrary made in 2007, Swatch has failed to provide appropriate distribution for Tiffany & Co. brand watches, with the result that our current business forecasts do not include any meaningful increase in watch sales or royalty income. Tiffany has honored its obligations under the agreement, and insisted that Swatch honor its own obligations, particularly its obligation to respect Tiffany’s rights regarding brand-management and product design. Tiffany & Co. is confident that its position will be vindicated in the pending arbitral proceedings in relation to this matter and Swatch’s misconduct.