Yahoo Finance France Slaps Rolex With 91.6 Million-euro Fine for Banning Online Sales
PARIS — Rolex has been slapped with a 91.6 million-euro fine for prohibiting its authorized distributors from selling online for more than a decade, according to a ruling of France’s competition watchdog.
In its ruling, the Haute Autorité de la Concurrence said the watchmaker’s actions were “serious, because they amounted to closing a commercialization channel, to the detriment of consumers and distributors, while online distribution has been growing momentum for the past 15 years for luxury goods, including watches.”
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The body rejected the Swiss watchmaker’s argument that banning online sales protected its image and thwarted counterfeiting, calling such a measure disproportionate. It also pointed out that competitors facing the same risks had “put solutions in place (particularly technological)” that allowed them to sell online while fighting counterfeiting and off-network sales.
Given Rolex developed “a program for the online purchase of pre-owned watches, whose authenticity it guarantees” with one of its retailers, “an absolute ban on the online selling of its products cannot therefore be justified,” it continued.
Rolex could not be immediately reached for comment.
For industry experts, the French ruling comes as no surprise.
“You can’t say at the same time you don’t want your product sold over the internet and delegate your certified pre-owned program,” said Oliver Müller, founder of consulting firm LuxeConsult, whose annual reports coauthored with Morgan Stanley are quoted in the watchdog’s conclusions.
According to the 2022 report, the Swiss watch industry represents production of around 16 million watches, with Rolex’s share coming at 1.2 million units in 2022. On the other side, counterfeiters pumping out an estimated 30 million to 40 million watches onto the black market, particularly popular models from Rolex, Patek Philippe, Audemars Piguet and Omega.
While fighting fakes and dupes is a legitimate pursuit for a brand, restricting one’s retailers from selling genuine product online amounts to a lack of trust, in his opinion.
“Come on, the gray market is those who flip their watches through marketplaces — whatever channel they bought them on — where there are plenty of fakes too,” he continued.
Only watchmakers with highly integrated, compact retail networks — and smaller outputs — such as Richard Mille and Audemars Piguet would have avoided running afoul of competition laws in France and the European Union, Müller said.
The latter brand produces 50,000 watches each year and has three doors in France (including two it owns) out of a 91-strong retail network worldwide. Richard Mille, which is 10 percent owned by Audemars Piguet, produces 5,300 units, with one store in France and another in Monaco out of 40 doors around the world.
At 1,500 doors worldwide and its million-unit production, it was a gamble too far for Rolex, in his opinion.
While expected, the ruling is bad news for Swiss watchmakers in general, according to Müller. “It will most probably trigger similar [rulings] in other countries and cases” against other brands who also restrict online sales, he said.
The Swiss watchmaker was however cleared of restricting prices, as the watchdog found that “the evidence in the case did not prove Rolex France had restricted the pricing freedom of its authorized retailers.”
The case had been referred to the French body by the Union de la Bijouterie Horlogerie professional organization, Marseille-based retailer Pellegrin & Fils and had resulted in raids on Rolex’s offices in France.
The Haute Autorité de la Concurrence holds Rolex France, Rolex Holding SA, Rolex SA and the Hans Wilsdorf Foundation ”jointly and severally liable” for payment of the fine.
In addition to the fine, the French competition watchdog imposed that Rolex inform all its authorized retailers of the decisions and publish the summary of its decision on its website in French newspaper Le Figaro online and in print as well as the Montres Magazine quarterly.
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