The other day, I was poking around in Swiss business registries (as one does on a weekend) when I noticed that Jörg Bucherer was still listed as the "president and delegate" of luxury watch retailer Bucherer, AG. A Rolex clock in front of an AD in New England. Since Bucherer, the man, passed away on November 8, 2023, this clearly raises some questions. More curious was the fact that Rolex ownership of Bucherer, the business, was not indicated in Bucherer's commercial registration and Rolex's own business registrations did not indicate a lash-up with Bucherer. News of Rolex's intent to acquire Bucherer broke roughly eight months ago.
Now, I will admit that I do not understand or know all the nuances involved in Swiss business registration. I do know that registrations are administered by the Swiss cantons (roughly equivalent to states in the US) so perhaps this was simply a matter of delay in updating the registrations across cantons (Rolex is registered in Geneva while Bucherer is registered in Lucerne). But I couldn't help but feel like there might be more to this.
When I first read of Rolex's plan to acquire Bucherer, I almost immediately began to wonder how antitrust review would work. In general, EU authorities have a higher bar for accepting certain business practices. In case after case, the track record shows that European regulators are far more willing to prohibit or limit practices that would be unconditionally accepted by American regulators. I'm not judging, or claiming that one approach is right or wrong. I'm just just reporting.
A few stories on Rolex's acquisition of Bucherer did indicate that the acquisition would go through antitrust review by Wettbewerbskommission, aka WEKO, aka Switzerland's competition commission. I couldn't help but wonder if Bucherer was actually in a sort of legal limbo while WEKO completed its review. So, I emailed the commission. I have to give them a lot of credit, I sent my email over the weekend and they responded first thing in the morning on Monday. My questions and WEKO's replies are below (copied verbatim):
1. (Horolonomics) Is WEKO reviewing the acquisition of Bucherer by Rolex?
WEKO: Yes, the planned acquisition is being reviewed.
2. (Horolonomics) How far along is the review of the proposed acquisition?
WEKO: We kindly ask for your understanding that we cannot provide you with any information on the status of the proceedings.
3. (Horolonomics) Are there any filings related to this acquisition that you could share with me?
WEKO: Currently, we are unable to provide you with any information due to the protection of official and business secrets. We will publish COMCO's opinion once the merger control has been completed and the business secrets have been cleared.
First, let's interpret some terms. "Merger control" is presumably the process whereby WEKO gathers the facts, interprets them within the context of law, and then makes a decision about the merger (prohibit, allow, allow with conditions, etc). One of the entryways to Rolex HQ in Geneva. "Business secrets" are part of the process because WEKO (and Swiss courts) tend to heavily redact decisions in order to hide certain things that a business doesn't want to reveal (like market share, profit margins, and the like). So we did learn one thing from this response: either merger control is not finished, clearance of business secrets is not finished, or both are not finished. My guess is that both are not finished yet. WEKO will no doubt require a large data pull from Rolex, Bucherer and / or interested third parties. That, alone, will take time. The analysis of data and decisionmaking will also require a good bit of time.
What's interesting about the WEKO response, for me at least, is that it arrived in my inbox on the same day that I reviewed something "rare as hen's teeth" as the saying goes: an interview with Rolex's CEO Jean Frederic Dufour. Interviews with the top Rolex executive, more or less, never happen. Yet one did, and it was published by a Swiss newspaper, NZZ, on April 6. The interview is absolutely fascinating to those following the watch industry. Numerous insights are worth noting when it comes to Dufour's interview. Many headlines emphasized his observation that viewing watches as financial assets was risky. But something else drew my attention.
At one point, NZZ's interviewers asked about the brands participating in this week's Watches and Wonders tradeshow in Geneva. Dufour shared that he recently visited the Hayek family in an effort to recruit more brands for Watches and Wonders. The Hayeks claim ownership of a significant portion of the Swatch group (at the end of 2023, the Hayek Pool represented 43.3% of all outstanding shares). Dufour indicated that the Hayeks wouldn't commit to joining Watches and Wonders. But I actually marveled that a) this meeting happened (since Rolex competes with Swatch Group in many product categories) and b) Dufour was public about it. I actually think the first of these marvels can be explained by the Bucherer merger and WEKO's role in said merger.
Back when the Bucherer acquisition was announced, I received a statement by Omega. The brand noted that 40% of its sales are from its "own global network" and that Bucherer "only represents a small portion of Omega turnover." The kicker, though, was the following: "We believe the recent Bucherer acquisition benefits the entire Swiss watch industry. Any recent changes by OMEGA is (sic) coincidental and the process would have begun long before the purchase." This sentence suggested we may see Omega's exit from Bucherer locations. Indeed, an archived version of Bucherer's web page shows that the retailer sold Omega as of August 4, 2023, but the current version of Bucher's web page suggests this is no longer the case.
I couldn't help but wonder if Dufour's "summit" with the Hayeks was meant to reassure Swatch Group that Bucherer should remain as an authorized dealer for Omega and the other members of Swatch Group. Exterior of a Rolex AD in New York City.Currently, a number of Swatch brands are still offered through Bucherer, including Blancpain, Breguet and Longines. There is some chance that Dufour has convinced the Hayeks that there is no need for a complete divorce with Bucherer (side note, since the acquistion announcement, Carl Bucherer, Breitling, Grand Seiko, Nomos, Omega and Patek have apparently left Bucherer while Baume and Mercier, Hermes, Jacob and Co, Mido, Montblanc, Norqain, Roger Dubuis, Ressence, Garmin, Gucci and Hermes have all joined Bucherer).
I also couldn't help but wonder if Dufour hoped to convince the Swatch Group doyens that they shouldn't complain too much to WEKO about the Bucherer acquisition. The Hayeks are familiar with the ways of WEKO. As I wrote a while ago, Swatch Group has been the subject of multiple Swiss competition commission inquiries and decisions related to supply of movements (ETA) and assortments (Nivarox). WEKO seems to have a habit of surveying "interested third parties" for their perspectives on particular regulatory matters. I wouldn't be surprised, in the slightest, if the Swiss regulator contacted Swatch Group, LVMH and Richemont for their perspectives on the Bucherer acquisition. Statements by these three could very well sway WEKO in a particular direction. Those statements will almost certain appear (redacted) in the final WEKO report.
There are, no doubt, thorny issues for regulators to sort. For example, will Rolex have access to confidential information about brands via its ownership of Bucherer? Brands often share product roadmap information with authorized dealers, as well as marketing plans and sales figures. Is there a regulatory concern if Rolex can access this information, via the Bucherer "window," after the merger? I don't know the answer to that question, but I could imagine it is one that regulators will likely ponder.
My sense is that the Bucherer acquisition by Rolex will, ultimately, be approved. I've previously noted that vertical mergers are typically more palatable to a competition commision, and that is what we're dealing with in this case. WEKO may seek certain assurances that competition, along some dimension, will not be harmed by the merger. But the regulator may even let that slide if the data suggestions the retail market is competitive enough. One thing is for certain: the WEKO decision will be one of the most interesting antitrust analyses we've seen in quite some time. The only question is, when will we see it?
Coda
I didn't know exactly where to fit this in the post, but I also noticed that Bucherer acquired Adresta AG in 2023. The company offers "software as a service" with four components: digital certification, digital after sales, an application for watch owners, and digital communication with watch owners. Interestingly, Adresta also has a relationship with an insurance provider. It will be interesting to see if Rolex leverages this Bucherer property, somehow, after the acquisition is complete.
Also, I didn't know where to put this in the post, but we are definitely in a different regime now when it comes to Rolex "speaking" to the public. Only three weeks ago, Bloomberg journalist Andy Hoffman published details from his discussions with Tudor's CEO. The era of Rolex inscrutibility may be coming to a close, although the amount of communication we'll see from the brand, going forward, remains to be seen.
My book on the history of Rolex marketing is now available on Amazon! It debuted as the #1 New Release in its category. You can find it here.
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Among many avid watch collectors, the term "in house movement" seems to elicit eyerolling disdain. Pieces of an assortment, including balance spring, from a non-Swiss movement. There is a sizeable perception that "in house" is, in fact, nothing more than an unnecessary marketing ploy designed to tease more money out of the wallet of buyers (by way of definition, an "in house" movement means that the mechanism inside a watch was predominently manufactured by a brand itself, kind of like "we make our own bread" at a restaurant). I'll confess that I'd begun to think similarly, that is, until I read a 66 page report posted by the Swiss Competition Commision on May 10, 2023. Yes, this is the kind of thing an economist finds interesting on a weekend, or at least this economist. Before we get into the details of this report, in the interest of full disclosure I should say that the original document was in a different language: lawyerese.
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