Companies in conflict over contracts and obligations.
Swatch Group yesterday announced that it has terminated its cooperation contracts with Tiffany & Co. New York, something it describes as a “necessary action following Tiffany & Co.’s systematic efforts to block and delay development of the business”.
The partnership with Swatch Group and Tiffany & Co. New York was founded in the spring of 2008, when Swatch Group founded Tiffany Watch Co. Ltd. The group was responsible for the development, production and distribution of Tiffany & Co. branded watches, with worldwide sales handled through points of sale operated by Tiffany & Co., by The Swatch Group Ltd. and by independent retailers.
Swatch Group and its Tiffany Watch Co. Ltd. Brand is now pursuing claims against Tiffany & Co. New York for the loss of planned long-term future business. The group says that Tiffany & Co. deliberately delayed the development of its watch lines and business with Swatch.
Tiffany Watch Co. Ltd. will be permitted to wind down current business over the course of two years following effective termination of the cooperation contracts.
In response, Tiffany & Co. said that since it entered upon this venture with the Swatch Group “it has become increasingly clear that Swatch is unwilling to honour 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 contrary made in 2007”, Tiffany & Co. says that Swatch Group has failed to provide appropriate distribution for Tiffany & Co. branded watches.
The company says that its current business forecasts do not include any meaningful increase in watch sales or royalties from the Tiffany & Co. name.
“Tiffany has honoured its obligations under the agreement, and insists that Swatch honour its own obligations, particularly its obligation to respect Tiffany’s rights regarding brand-management and product design,” said a release from the brand.
“Tiffany & Co. is confident that its position will be vindicated in the pending arbitral proceedings in relation to this matter and Swatch’s misconduct,” the statement continued.