Dissident watchmakers
Because the Swiss watch industry was very dependent on exports, it was always particularly sensitive to economic crises. This was clearly seen in 1921 and 1922, when the Swiss Confederation was forced to take steps to protect the industry. Many in the industry believed that watch manufacturers should unite in order to regulate production and sales, especially those reliant on exports. This was not easy, since the industry had become particularly specialized and competitive by this point.
Three associations were created between 1924 and 1927 to limit harmful competition: The Federation Suisse des Associations Fabricants d'Horlogerie (Swiss Federation of Associations of Watch Manufacturers) in Bienne, which was focused on the interests of watch manufacturers, Ebauches SA in Neuchâtel, which united the main ebauche factories, and the Union des Branches Annexes de Horlogerie (UBAH) (Union of Secondary Watchmaking Branches) in Neuchâtel, which united the manufacturers watch components. In 1928, these three associations reached agreements aimed especially at preventing signatory members from doing business with so-called “dissident” companies. They felt that this would enable the associations to control the entire industry and prevent "dumping" by any company in Switzerland.
The agreements were not successful, however. It was decided that they would be terminated on March 31, 1931, with the industry seeking a more powerful agreement. This date was extended to July 31 of that year, with all attention focused on the dissident ebauche producers.
At the assembly of delegates on July 30, 1931, the assembly decided simply to purchase the dissident factories, with officers assuring the assembly that they had made acceptable offers to all. The assembly picked August 1931 to enforce the conventions which prohibited members from dealing with non-unionized Swiss manufacturers. A special control body was created for this purpose, as well as an arbitration tribunal responsible for settling any disputes that might arise. Once again, the industry discovered that it was not as easy as had been thought to suppress the competition of dissidents. In particular, acquisition talks failed with regard to two ebauche factories in the Bernese Jura, Essor SA in Court, and Meyer et Fils in Pontenet.
In autumn 1931, the so-called "Superholding" was set up for the Swiss Confederation. This company, known as ASUAG, was established with a subsidy of 13.5 million francs from the Confederation.
On March 12, 1934, the Swiss Federal Council was forced to intervene by significantly restricting freedom of trade and industry as far as watchmaking was concerned: It prohibited the foundation of new watchmaking companies or expansion of existing ones until December 31, 1935, as well as the export of ebauches and spare parts (chablonnage).
Dissident Factories
In April 1931, a group of so-called dissident factories was set up to defend their right to export movements beyond what was allowed by the conventions. Members of this group were:
- Schild Frères & Cie, Fabrique ETA, Granges (acquired March 21, 1932)
- Ed. Kummer SA, Bettlach (acquired September 23, 1932)
- A. Reymond SA, Unitas, Tramelan (acquired February 5, 1932)
- Fabrique d'Ébauches de Fleurier SA, Fleurier (partners with Ebauches SA in 1928, acquired in 1932)
- Kurth Frères, Granges (partners with Ebauches SA in 1928)
- Meyer et Fils, Pontenet (refuses to be acquired by Ebauches SA, closed in 1941)
- Rosse & Affolter, L'Essor, Court (refuses to be acquired by Ebauches SA, joins the FH with a focus on in-house movements in 1941)
- E. Matter, Granges
- E. Girard, Moutier
The largest of the dissidents are purchased by Ebauches SA in 1932 using the 13.5 million franc fund provided by the Swiss Confederation. This includes Schild Frères, Kummer, Unitas, and Fleurier. Two smaller firms, Meyer et Fils and Essor, refuse to be acquired, leading to a standoff with the holding company, but the ebauche operations of both were acquired in 1941 along with a number of others. It is unclear if offers were ever made for E. Girard and E. Matter. Of these small firms, only Essor survives.
In 1941, the Swiss federal government provided a grant allowing ASUAG and its subsidiaries to acquire many dissident factories:
- Joins Ebauches SA
- Joins FH to focus on manufacturing in-house movements for their own watches
- Joins the FH to focus on assembling watches with other movements
- Joins FBR to focus on producing balances
- Joins FAR to focus on producing assortiments
- Exits the watch market
- Closed
Pierce
The most successful dissident firm was Pierce of Moutier. The company refused to join Ebauches SA or ASUAG and would not abide by any quotas. It was punished by being excluded from trade with any member of the FH or UBAH, yet the firm continued to produce watches for decades. Ultimately, Pierce was able to sue FIDHOR and win a reprieve from the cartel's restrictions in the 1950s, liberating the entire industry.
Because it was excluded from all trade with other firms, Pierce was forced to develop its own tooling, components, and movements in-house. No other Swiss firm was as independent as Pierce until the 21st century, when firms like H. Moser & Cie. and Parmigiani Fleurier began producing their own movements, springs, and balances.
Degoumois
Degoumois et Cie in La Chaux-de-Fonds was a member of the Syndicat Patronal des Proucteurs de la Montre (Employers' Union of Watch Producers) there. This group was affiliated with the Fédération Horlogere, and manager J.-V. Degoumois was chairman and representative in this organization. On April 13, 1931, Degoumois signed a declaration in favor of the three associations showing that he was in favor of eliminating competition from dissident manufacturers.
In 1932, Fidhor, the control body established to enforce the restrictions on trade, began an investigation into Degoumois et Cie to determine whether it was in compliance with the conventions. It determined that the company could not show that it was complying with the agreement, and had purchased components from non-member factories for 228,000 francs. The delegates of the three associations submitted the case to the Arbitration Tribunal, asking that Degoumois be sentenced to a penalty of 48,054 francs. Degoumois denied being bound by the agreements of July 31, 1931 and did not recognize the jurisdiction of the Arbitration Tribunal. The parties then agreed to bring the case before the Federal Tribunal for resolution.
The three associations requested the following from the Federal Court: 1. That it be established that Degoumois was bound by the agreements concluded on July 31 for the protection of the watch industry 2. That Degoumois be ordered to pay a contractual penalty of 50,000 francs
Degoumois argued that it was not bound by the agreements of July 31, 1931. Moreover, the Watch Federation and the Ubah did not have legal jurisdiction because, as companies pursuing an economic goal, they should have been entered into the commercial register. They also argued that the agreements were never properly concluded, because two ebauche makers (Essor and Meyer) were not acquired as specified by the agreement.
After a hearing, the Federal Court agreed that the Fédération Horlogere and the Ubah were not properly listed in the commercial register but were not required to do so. They also ruled that, although it is true that not all the dissident ebauche makers were acquired by Ebauches SA, this did not negate the agreement since they only made up 2-3% of the total production of ebauches in the country. Since the associations accepted the conventions in August 1931, and since Degoumois accepted their regulations, they were held to be in force.