Swiss watchmaker Rolex was fined 91.6 million euros (about 7 yuan) by the French antitrust department for prohibiting authorized dealers** from selling branded watches for ten years$1.2 billion). According to Bloomberg News and Swiss News, on December 19, the French Competition Authority (The Autorite de la Concurrence) said in a ** statement that the department rejected the grounds of appeal of Rolex France, including the legitimacy of its ban on authorized dealers** from selling Rolex watches in order to "combat fakes and prevent parallels**".
The case was brought against the French antitrust authorities by The Union de la Bijouterie Horlogerie and the family-run French fine jeweler Pellegrin & Fils. The French Competition Authority considered that the terms of the selective distribution contract between Rolex France and the brand's authorized distributors were in line with a "vertical agreement" and constituted an element of "restriction of competition".
The decision by the French antitrust authorities to impose this penalty is a challenge to Rolex's long-term business model. Founded in 1908, Rolex remains a 100% authorized dealer model. Rolex has been working with authorized ** dealers all year round to sell Rolex-branded watches worldwide. Although many **commercial stores have opened online regular**, they have not opened online transaction functions, and their functions still provide product information and offline store guidelines.
Rolex's strict control of authorized dealers and the management of good relationships have provided them with stable and sufficient income. As of 2022, the Rolex brand has ranked first in the world's market share for many years, and Morgan Stanley expects its revenue to be 9.3 billion Swiss francs (about 77 billion yuan).
Since 2023, Rolex has also launched the "Resale of Pre-Owned Rolex Watches" program, which gradually rolls out the resale of pre-owned watches in Rolex Boutiques around the world through partnerships with authorized dealers. This is a key step in Rolex's approach to the control of the second-hand market.
In August 2023, Rolex announced the acquisition of its long-term partner, Bucherer, a well-known Swiss jewellery and watch retailer. Carl F. Bucherer has more than 100 stores worldwide, of which 53 are Rolex boutiques and 48 are Tudor Boutique by Rolex. This represents a greater control of Rolex's sales channels.
According to the analysis of French industry experts, this is one of the largest fines issued by French regulators this year. This penalty decision is not only a major blow to Rolex, but also sends a clear signal to the entire luxury industry that even the most high-end brands must comply with competition regulations in the field of digital sales. Experts stress that luxury manufacturers need to find a balance between maintaining their brand image and following the principles of fair competition.
It is worth mentioning that the "parallel**" mentioned by Rolex in the grounds of appeal refers to the parallel import of goods, which is actually commonly known as "parallel goods". This kind of goods are goods imported without formal authorization, corresponding to the goods imported by **merchants commonly known as "licensed goods". In other words, Rolex France argued on appeal that it was "justified" to impose restrictions on the sale of ** by authorized and regular dealers in order to combat counterfeit goods and "parallel imports".
The French Competition Authority further stated that Rolex's main competitors "face the same risk [of fakes and parallels**], but that they are "authorized dealers** to sell their products under certain conditions". As a result, the French Competition Authority believes that "risk aversion can be achieved by less restrictive competition".
The agency explained that Rolex's ban on the sale of products has had a serious adverse impact on market competition and has harmed the interests of consumers and distributors. Given that the practice lasted for more than 10 years and that the sale of products was a luxury item, a hefty fine was justified.
In addition to the fine, the French Competition Authority also required Rolex France to notify retailers of the executive order within two months and publish a summary on its website for seven consecutive days.
The French Competition Authority imposed fines on Rolex France, as well as its affiliated parent companies in Switzerland, Rolex Holding GmbH, the Hans Wilsdorf Foundation** and Rolex AG. Among them, Hans Wilsdorf** is the wholly-owned family behind the Rolex company** and the founding family of the Rolex brand**.
At present, Rolex has not made a public statement on the execution by the French regulators.
Rolex is not the only company to be penalized by French regulators for blocking online sales. France's competition authority also recently imposed a hefty fine on the country's high-end tea producer, the Marais Brothers, for "prohibiting the sale of products and the resale of their products to other distributors".
Comprehensive report by Beijing Business Daily.