In a landmark legal development, the renowned Swiss watchmaker Rolex finds itself at the center of a major controversy. The French competition watchdog, Haute Autorité de la Concurrence, has delivered a resounding verdict, imposing a staggering fine of 91.6 million euros on Rolex. This hefty penalty comes as a consequence of Rolex’s lengthy prohibition of its authorized distributors from engaging in online sales, a practice that has spanned over a decade.
In a comprehensive ruling, the competition authority has taken a strong stance against Rolex’s actions, deeming them “serious.” They argue that Rolex effectively closed off a crucial commercial channel, causing harm to both consumers and distributors. This decision comes at a time when online distribution has been steadily gaining momentum in the luxury goods sector, including the watch industry, over the past 15 years.
Rolex had defended its ban on online sales, contending that it was essential to safeguard the brand’s image and combat the widespread issue of counterfeiting. However, the regulatory body found this argument to be disproportionate. They pointed out that other luxury brands facing similar challenges had successfully implemented various solutions, particularly through technological advancements, that enabled them to conduct online sales while effectively combatting counterfeiting and unauthorized sales outside their official network.
A particularly compelling counterargument emerged during the proceedings: Rolex had actually introduced a program facilitating the online purchase of pre-owned watches through one of its authorized retailers. This program came with a guarantee of authenticity, raising questions about the justification for Rolex’s absolute ban on the online sale of its products.
While Rolex was cleared of allegations related to restricting pricing freedom for authorized retailers, the financial penalty remains substantial.
This legal battle was initiated through the collaborative efforts of the Union de la Bijouterie Horlogerie professional organization, Marseille-based retailer Pellegrin & Fils, and culminated in official raids conducted on Rolex’s offices in France. The regulatory authority has held Rolex France, Rolex Holding SA, Rolex SA, and the Hans Wilsdorf Foundation jointly and severally liable for the payment of this significant fine.
In addition to the substantial monetary penalty, the competition watchdog has imposed additional obligations on Rolex. The company is now required to inform all its authorized retailers about the watchdog’s decision. Furthermore, Rolex is mandated to publish a comprehensive summary of the ruling, ensuring transparency and accessibility. This summary will be disseminated through various channels, including Rolex’s official website, the renowned French newspaper Le Figaro (both online and in print), and the widely-read Montres Magazine quarterly publication.
This verdict serves as a powerful reminder of the growing scrutiny surrounding anti-competitive practices within the luxury industry. It underscores the importance for industry leaders, such as Rolex, to adapt to the evolving landscape of online sales while upholding fair competition practices, ultimately benefiting consumers and the industry as a whole.