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Rolex Pays $750,000 to Settle Antitrust Charges

March 1, 2006
Rolex Watch U.S.A. Inc. has agreed to pay $750,000 for engaging in anticompetitive practices.

The penalty is part of a settlement with the Department of Justice that resolves Rolex's alleged violations of a 1960 consent decree that prohibited U.S. importers of Swiss watches and watch parts from engaging in anticompetitive practices in the U.S. watch industry.

"The rule of law requires companies to abide by a court's lawful orders or pay the consequences. Even when a company believes that a court's order is no longer necessary to serve its original purposes, the appropriate recourse is to ask the court to modify its order, not to flout it," said Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division.

During its investigation, the Justice Department determined that, as a result of significant changes in the watch industry during the past 45 years, the decree is no longer necessary to protect competition and therefore should be terminated.

In its filing, the Justice Department said that certain provisions of a Rolex policy statement violate the decree by placing restrictions on the use, resale, and pricing of watch parts purchased from Rolex.

According to the pepartment, Rolex's policy is to not sell watch parts to independent watch repair facilities or watchmakers unless the watchmakers agree that they will not use the parts in any watch that has non-Rolex parts or accessories.

Rolex's policy also prohibits watchmakers from reselling spare watch parts under any circumstance and from charging an excessive markup for watch parts used in repairs.

The department alleges that these provisions of Rolex's policy violate the terms of the 1960 decree.

In 1954, the Department filed an antitrust complaint alleging a wide-ranging conspiracy between Swiss and U.S. watch companies to fix prices, terms, and conditions of the sale of watches and watch parts, to restrict the manufacturing of watches and watch parts in the United States, and to control the export of watches and watch parts into the United States.

ore than 20 defendants were named in the complaint, including The American Rolex Watch Corporation, which today is known as Rolex Watch U.S.A. Inc.

On March 9, 1960, just prior to trial, the United States and 11 of the defendants, including Rolex, entered into a consent decree that resolved the complaint's antitrust concerns.

Under the decree, the defendants are prohibited from placing certain restrictions on the use of watch parts or watchmaking machines purchased from the defendants. The decree also prohibits the defendants from entering into certain agreements that fix or control the terms or conditions on which watches, watch parts, or watchmaking machines purchased from the defendants may be resold.

Rolex Watch U.S.A. Inc. is the U.S. subsidiary of the Swiss watch manufacturer Montres Rolex S.A. Rolex Watch U.S.A. imports, distributes and services Rolex watches, stopwatches, pocket watches, and clocks, and maintains a network of Rolex watch dealers in the United States.

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