Engagement ring, Tiffany & Co. Make clic to buy it
The legal battle between Tiffany and Swatch worsens. A Dutch court has issued a favorable ruling at Tiffany regarding the dispute with Swatch, breaking down the decision of a Dutch court of arbitration, which ruled in December 2013 that Tiffany had to compensate the Swiss watchmaker with $419 million plus interests.
The origin of the conflict between the two dates back to December 2007 when the two companies signed an agreement whereby Swatch obtained a 20-year license to manufacture a collection of watches under the Tiffany brand, taking advantage of the image of exclusivity of the US brand. The versions differ from the source of the conflict because, according to Swatch, it invested millions in the collection while Tiffany tried to delay or even block its development.
Tiffany’s version is that it delivered as agreed in the contract and the law and was Swatch which ended the joint venture unilaterally in 2011. In the middle of those it is circulating a speculation that Tiffany did not like the collection created by Swatch so it tried to change it and finally boycott it.
In any case, the only certainty now is that the decision of the three Dutch judges would force Swatch to repay the compensation collected after the arbitration, although this is by no means the end of the story, as the watchmaker has already confirmed it will appeal to avoid making the payment now. The appeal process may take another 18 months with a clearly uncertain end.
The figure at stake is not exactly trivial for any of the two companies, although it is particularly important to the US jewelry. The annual profit of Swatch was around $1.5 billion in 2014, with a 26% decrease over the previous year, while sales exceeded $9.0 billion, with a 5% advance. Meanwhile, Tiffany, which publishes its annual results on March 20, did not reach $500 million profit in 2013, so the compensation means profits for almost an entire year.
After the rule, Tiffany´s stock fell by more than 5%, although the punishment has not gone farther by uncertainty over the result of the litigation.
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