The 1953 Legal Battle Between the Two American Watch Companies
1970s Hamilton Fontainebleu Chron-Matic
In the early 1950s, two American darlings of the watchmaking industry went head-to-head in a court battle to be remembered. This 1953 standoff was not their first, but it was one that ended decisively for one of the two companies.
Hamilton, the plaintiff in this case, alleged that Benrus was breaching antitrust laws by acquiring large blocks of Hamilton’s common shares – presumably to gain control of the company. This would’ve been a breach of antitrust law that prohibited companies from acquiring their competitors to create monopolies. At the time, Benrus made a couple million dollars more in revenue than Hamilton – it had recently overtaken its Pennsylvania counterpart, becoming the third largest watch company in America behind Bulova and Elgin. Both companies had revenues of less than (but close to) $20 million for the years of 1951 and 1952 and their sales each accounted for approximately 10% of the sales of timepieces in the United States.
At the time, both companies were part of what was called the ‘Big Six’ which were Benrus, Hamilton, Elgin, Bulova, Longines-Wittnauer, and Gruen. Although Hamilton was considered to produce higher quality timepieces than Benrus, they still competed heavily in the US market. Interestingly, Hamilton, in August 1952, announced that it would be changing from its traditional method of using wholesale distributors to sell their watches, to selling directly to retailers. Imagine that now we see brands are turning to combinations of online retailers and their own direct-to-consumer platforms.
1938 Benrus ad
In any event, the basis of the case arises when, between March and September 1952, Benrus purchased over 90,000 shares of Hamilton’s outstanding stock, acquiring over 20% of the company and even telling the President of Hamilton at the time of this investment. In response to this, a group of Hamilton stockholders created a voting trust to block Benrus’ influence in the company. Their voting trust amounted to about 40% of the company's shares and meant that no individual within the trust could influence the decisions of the trustees – who would now hold heavy sway over the company.
Benrus at the time still relied on importing movements from Switzerland, while Hamilton produced their movements stateside. When the US Tariff Commission proposed to increase tariffs on Swiss watch movements, it became clear why Benrus had been acquiring Hamilton stock. It was a hedge against potential increased tariffs or a blocking of watch movement importations! This was evident as of early January 1953, when the head of Benrus wrote to the officers of Hamilton that they needed to either develop their own production facilities or acquire a company with them to hedge against potential strife in terms of movement importations.
The Richard Mille RMUP-01 Ferrari features a sapphire covered central dial which displays the time, which is bordered by two integrated crowns – one to adjust function, the other to wind the watch. It also features a balance dial and Ferrari’s iconic logo on the other side of the dial.
While Benrus argued that they acquired the stock for investment (for the reasons stated above), the judge decided that Benrus had, in reality, acquired the stock of the company for ‘advantageous’ reasons – meaning that the case was decided in favour of Hamilton!
Benrus had insisted upon its right to vote at meetings and even hire a director but it was determined that any vote by Benrus would likely hamper competition, and also that Benrus’ vote could constitute an imminent threat to Hamilton.
Another Benrus ad
Ultimately, Benrus’ assertion that they had acquired the stock as an investment was seen as naïve by the judge – especially in the face of having acquired $1.3 million worth of shares!
By the late 1950s, Benrus was on the decline; eventually sold off in the late ‘60s before passing through many more hands. Hamilton, on the other hand, continued to do well until it was acquired by SSIH in 1971, eventually becoming a part of the Swatch Group.
By: Andres Ibarguen