Alarm over Watches

The peaceful Swiss were up in arms against the U.S. last week. The battle was touched off by the U.S. Justice Department, which filed an antitrust suit in Manhattan accusing Switzerland's watch cartel and U.S. watch importers of conspiring to control production and fix prices in the U.S. Reaching out across 3,850 miles to name Switzerland's proudest and most respected watchmakers* as coconspirators, the Justice Department charged:

P: Bulova Watch Co. and Gruen Watch Co., in exchange for Swiss movements and parts, agreed to limit their U.S. manufacturing, import from no country except Switzerland, permit a cartel-hired accountant to audit their books.

P: Benrus Watch Co. agreed in 1945 to give up manufacturing watches and parts in the U.S. and to liquidate its plant so nobody else could make watches there.

P: Three Swiss makers agreed to set up no plant in the U.S., while the U.S. subsidiaries of seven others allocated markets, restricted re-exports from the U.S., agreed to buy only from Switzerland.

P: The U.S. ad agency of Foote, Cone & Belding conspired with the cartel to police American importers of watches and parts.

The suit actually revealed nothing new. U.S. watchmakers have long known that the only way to buy Switzerland's low-cost movements ($4 for 17 jewels v. $10.50 for the same U.S.-made movement) and parts is through the decades-old cartel. The Swiss not only control sales of their watches, they also control sales of their top-quality watchmaking machinery, thus restrict watch manufacturing all over the world. While such obstacles to competition are against antitrust laws in the U.S., they are not illegal in Switzerland.

Coming so soon after President Eisenhower had boosted U.S. watch tariffs 50% (TIME, Aug. 9), the suit could hardly have been more badly timed. It was filed only eight days before the opening in Geneva of the General Agreement on Tariffs and Trade conference, may well hamper U.S. bargaining at the conference. The Swiss, who buy $3 worth of U.S. goods for every $1 worth they sell in the U.S., talked of cutting U.S. purchases. The Swiss also plan to fight their case in court.

In recent months the Federal Trade Commission has been flooded with complaints about health and accident insurance advertisements. After comparing the ads with the fine print in the policies themselves, the FTC last week issued complaints of "unfair and deceptive" ads against 17 firms accounting for almost a third of the $1 billion worth of health insurance sold annually by U.S. companies on an individual policy basis. Included were the four biggest in the field: Mutual Benefit of Omaha, Dallas' Reserve Life Insurance Co., Bankers Life & Casualty (the White Cross plan) and United Insurance Co.

In its charges, the FTC described a variety of what it called deceptive ads. Said a typical one: IT PAYS YOU UP TO $15 A DAY FOR 100 HOSPITAL DAYS for each sickness or accident. But such policies, stated the complaint, usually do not pay expenses caused by a lengthy list of disabilities (nervous disorders, venereal disease, miscarriage, etc.). Nor are they apt to cover ailments occurring within six months of the policy date (hernia, tuberculosis, heart disease, etc.).

* Among them: Gruen, Wittnauer, Omega, Longines.

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