Dead Letter Laws and the Watch Industry

Anarchy is a society without laws.

AI generated image of a law rendered void.

I sometimes wonder if watch collecting is a near-anarchic niche given the number of laws and regulations which are normally reliable but often weakly enforced when it comes to watch collecting. Take, for example, theft of a $20,000 car. According to the Insurance Information Institute, 85% of stolen cars are recovered. You have decent odds of retrieving a stolen car. Or, if your insurance company disburses cash to compensate the victim of car theft, then the insurance company has a very good chance of getting stolen cars back, selling them, and maintaining lower premiums as a result.

I don't know for certain, but I strongly suspect that a stolen Rolex Daytona ref 116250 worth $20,000 is recovered far less than 85% of the time. For example, The Watch Register claims to have over 100,000 stolen watch serial numbers in its database. Over a decade, it also claims to have seen the recovery of 4,500 watches for a recovery rate of just 4.5%. Don't get me wrong, a collector can still buy insurance which will make them whole in the event of theft. But there's no such thing as a free lunch. A low recovery rate of stolen property means that insurance coverage is more expensive than it needs to be because insurers are, perhaps, more likely to take a loss insuring watches (in contrast to cars).

Criminal statutes are, perhaps, not the only "dead letter" laws in the world of watch collecting (ie laws that should be in effect but are effectively "dead" due to lack of enforcement or some other reason). Civil statutes may also be unenforced. Developing a "spending history" is one of the more straightforward means by which a collector might obtain a highly desirable watch in short supply. If you buy watches from brands which you are less interested in, or perhaps buy jewelry, you can build a spending history with a retailer. Roughly speaking, the more you spend the more access you might have to "hype" watches. But this practice may run afoul of antitrust laws prohibiting "tying" of sales (see the US Federal Trade Commission web page here). Despite this possibility, the practice of "building relationship" through purchasing of unrelated items remains a known behavior among watch retailers, and it has been for many years (take a listen to the Wristcheck Podcast episode here for more details).

Perhaps the most recent example of "dead letter" laws in the watch industry emerged during a recent public meeting held by the Richemont Group, owners of Cartier, Vacheron Constantin and other watch brands. During the event, on March 31, 2025, Richemont Chair Johann Rupert said "remember that, at our AGM meeting (annual general meeting) I asked for discipline by the Swiss watch industry." Previous reporting connected this call for discipline to Rupert's claim that "One should be cautious in just trying to pursue volume." Now, it is certainly true that Rupert's statements fell short of an explicit call for a target to reduce the supply of watches, akin to the OPEC cartel's attempts to restrict the supply of oil now and then.

But such statements ceraintly appear "toes on the line" of legality when it comes to a practice referred to in antitrust law as a "restraint on trade." For example, the first section of the U. S. Sherman Antitrust Act reads as follows: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." This law exists due to a well-known principal taught in introductory microeconomics classes: when a firm or firms restrict output below a competitive level, prices are inefficiently high and a market does not perform as well as it might otherwise. The US Department of Justice has an entire chapter in an advisory report dedicated to its anticartel activities.

There are a wide range of possible responses to the observations I've offered above. One would be to simply view the "unfettered" nature of the watch ecosystem as a desirable state of affairs. I have no doubt that there are some risk-loving collectors who welcome the opportunity to spar with those in the watch indsustry who might play fast and loose with the laws and rules surrounding commerce. On the other hand, I also believe there are ample collectors who have a reasonable level of risk aversion. Such buyers would undoubtedly prefer to transact in settings where they can rely upon various legal institutions to ensure that they enjoy a fair experience. My general belief is that uncertainty over the stability of "ground rules" in commerce is, net, a detractor. Take, for example, the travel advisories issued by governments when a particular location has weak enforcement of rules and laws. People don't generally view those advisories as an invitation to go and spend more money in a chaotic destination.

Particularly in an environment of weak demand, it is at least worth discussing whether there is room for improvement when it comes to the watch buying ecosystem. Are there steps the industry can take to create more certainty for buyers? Would those steps perhaps even pay for themselves in the long run? I don't know the answers to these questions, but I think they are worth pursuing.

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