No competition abuse by refusal to supply spare parts to repairers

In a recent decision by the European Commission an investigation into the watch repair market has been closed. A European group of independent watch repairers made a complaint to the European Commission that luxury watch manufacturers were refusing to supply or had begun to limit the supply of spare parts to allow them to repair luxury watches. In the past, luxury watches were supplied by a network of independent watch repairers as well as the original manufacturers.

The complaint was that in recent years the luxury watch manufacturers had cut off or at least reduced the availability of spare parts. The Commission initially effectively dismissed the complaint. On appeal, though, that Commission decision was rejected and the Commission was required to carry out an investigation. The allegation was that there was an illegal agreement or concerted practice between the luxury manufacturers and an abuse of dominant position. This, the complaint stated, threatened to drive the independent repairers out of business.

Following a comprehensive investigation, the Commission concluded that there was little likelihood of finding infringements of Article 101 (agreements/concerted practice) or of Article 102 (abuse of dominance in the market) and the investigation was closed.

This decision will be of interest to several other sectors dominated by large OEM’s which are keen to capture repair and service revenue. Anecdotal evidence suggests in several sectors the OEM’s are restricting the availability of repair parts to selected distributors who meet certain criteria thereby excluding a wider range of service providers and maintenance organisations. Whether or not this is justified on the basis of quality and/or technical complexity of the products in question will need to be assessed on a case by case basis. However, the motivation may at least in part be not so much quality or a need for technical competence, but a desire to ring fence revenues from maintenance and repairs.